slightly off topic - anyone considered buying a holiday cottage to let out?

[chickpea]

As the topic suggests -

Has anyone ever considered buying a holiday cottage to let out?

If so, what are the pitfalls? How easy is it to get a mortgage/insurance etc?

[Richlist]

I don't have any holiday lets myself although I do have a holiday home.....I just don't let it out. My experience is limited but:

1. I did initially want to buy one to let out a few years ago after spotting & falling in love with it. Unfortunately it being in a nice part of Somerset meant the price was astronomic and I decided not to proceed.

2. Of the people I know with holiday lets they are :

a) Labour intensive.

Heavy on wear & tear......new tenants every 7-14 days. Expect to replace expensive items far more regularly.

c) Usually have to be more expensively kitted out than normal lets.....people expect latest TV, satellite, electronic gizzmoos, well appointed kitchens, bathrooms, full furnished with absolutely everything etc.

d) On the plus side there are (or were) tax advantages.......but of course given the above there needs to be.

e) Best done and more profittable if you live nearby and don't need to employ..... cleaners, someone to do the laundry, key holders, emergency cover, gardeners, maintenance peoples etc etc.

Its far to hands on for me to make a decent profit. I expect someone will be along shortly with a completely opposite view.

Good luck.

[bdh198]

We only have one holiday let (it's been in the family for years), and as Richlist says it is very labour intensive because each week (especially in the summer months) you will have new people moving in. It's actually a totally different business from our other tenanted properties because the people who are staying in the property are customers (who are on holiday), and not tenants (who make your house their home).

The 'downside' is the fact you have to be running it much more as a day to day business because you will constantly be looking for new lets, dealing with enquiries and preparing the property between lets (usually on a Friday evening or Saturday morning as that's the most common change over time). However, if you enjoy being hands on and live locally then it can work well. Ours is not local and so we have a letting agent who manages all the letting side. He's a little pricy (20%), but considering the amount of work he puts in compared to a property rented under a tenancy it's worth it.

The upside is the rent you will achieve, especially in the summer if it is in an attractive location. The tax is also attractive especially on the CGT front, but you will need to speak to an accountant to ensure that the property meets the requirements for it to be treated as a 'Furnished Holiday Let' (has to be available a certain number of days a year and actually rented out a certain number of days a year). Of course, another upside is you aren't going to face the problem of eviction and tenants refusing to move out (and associated lost rent) because the customers do not enjoy the same rights as under a tenancy.We've been letting our cottage as a holiday let for the last 20 years and never had the issue of someone not moving out... However, you will have to deal with letters of complaint, and some people go out of their way to try and find something to complain about!

Ours isn't mortgaged so can't help there, but insurance is quite straightforward in terms of the holiday letting and is not difficult to arrange. However, our insurance does have a slightly higher premium because the cottage is thatched.

Good luck

[Melboy]

I have been looking for a holiday cottage for years and years but recently decided it was just not worth the hassle of owning one and the expense also of having one and the one thing that made my decision so easy in the end was that I have found a holiday cottage which is just superb on the coast beautifully furnished and everything I would ever need and it cost me £320 for the week for everything included.

No capital outlay of at least £200 grand plus to purchase.

No Council tax.

No utility bills to pay whether I am there or not.

No maintenance bills plus refurbishment time & cost.

No gardening !!

No nothing!

So I can go to my rented cottage 5 times a year if I want to with no worries whatsoever!

[chickpea]

Thanks guys.

Lots to think about!

Basically, we have been going down to Cornwall on holiday every summer for the past 8 years. Love it so much we've considered moving there, but various practical considerations stop us at the moment. So....a holiday home/let seems like the next best thing.

As has been pointed out, properties there are incredibly expensive (to match weekly rents of upto £1500 for a 2 bed), so it would almost certainly involve buying a doer-upper. Through our time spent down there, we've made good friends with a couple who run their own holiday let business. They are happy to advise on all the pitfalls, and help find a property as they are well known to the local estate agents etc.

Another option we have been offered is to buy one of their holiday lets, which they would continue to manage. It's more complicated than it may seem at first glance, so I'm not sure that's even a consideration.

Thinking about it, it does all sound like a lot of hard work, especially running it from 200 miles away. Not sure we've got the experience to do it at the moment.

We're seeing our FA tomorrow, just to check on all our investments and borrowing possibilities - we've seen a property here that needs work doing but might be a nice project with potential to let out or sell on. I just feel the need for a project of some kind!

[Grampa]

If you are expecting to let it xx amount of times a year, work your calulations out on letting it only 50/75% of the expected amount to give yourself a buffer if you need the income to pay the mortgage.

[Chestnut]

I have rented holiday cottages and flats for many years and members of family also have their own which I use frequently.

I'm with previous comments; it's a very different type of business and I wouldn't attempt to manage fully from a distance.

I would recommend finding a good holiday let agent with on-line booking, who works in area to Visit Britain type star standards. Test one out with a week's booking and see what type of properties are run most successfully.

The upside is a good agent sets competitive charges, arranges bookings, cleaning, linen changes, fixes minor faults (e.g. loo flush), appliance testing, and report deficiencies to owner for attention. Also, provided agent gets reasonable fill of seasonal bookings, you should be allowed some 'owner bookings' less agent's booking percent, and out-of-season 'owner/family time' at cleaning charge only.

The owner's task is to maintain property and equipment to required standard (e.g. carry spares for broken and 'walked' items) - then keep it on top of annual star condition reports from agent.

I have no idea how this profits as a business - obviously depends on mortgage costs etc. - but as owner you benefit from a holiday pad in area of your choice.

[chickpea]

We've had a meeting with our FA this morning.

Seemingly, a holiday let mortgage has much more stringent conditions than a standard BTL - one of which is that it's personal earnings-based, not just rental income. That pretty much puts us out of the game.

Thanks for all the advice, though.