A bumper crop of Brits holidayed at home last year and poor exchange rates and economic uncertainty look set to boost the trend for staycations.
“We have a couple of B&Bs on the market and they are already almost booked up for summer,” says Vicki Slack, of Harris Shields estate agents in Bridlington.
For those looking to buy a coastal B&B or holiday home, now is the time to act as competition is hotting up. Investors are turning their attention to holiday lets, which are now more tax efficient than tenanted properties. From this April, there will be restrictions on the level of mortgage costs that can be set against rental income for tax purposes on conventional buy-to-lets. However, this does not apply to holiday properties, which are classed as business assets. This means that capital gains tax is levied at 10 per cent, rather than the 20 per cent for conventional rentals. To qualify, your property must be available at least 210 days of the year and has to be let for at least 105 days.
“Easter is a key time for people buying holiday property so there is more competition in spring. Also, by that point they have already missed the start of the season, which is February half-term,” says Vicki, who adds that choice is limited thanks to a shortage of stock.
Her patch in Bridlington is often ignored by investors looking for a seaside property in Yorkshire. Whitby, Robin Hood’s Bay, Scarborough and Filey are the top search areas and yet “Brid” has much to offer. Its flat terrain makes it perfect for those with mobility problems and gives it a valuable USP. It also has stunning beaches, an historic old town, the Spa entertainment venue and a new Leisure World fun pool.
Prices are enticing, especially now that those buying extra homes i.e. anything that is not a main residence, attracts an extra three per cent stamp duty. Values here are at least 20 per cent less than those in Whitby. To get even more for your money you can look to the villages just outside popular coastal towns.
“Villages that are slightly inland from Whitby, such as Sleights, Egton and Grosmont, are also well liked as they offer the beauty of the North Yorkshire Moors and are a short drive to the beach,” says Susan Goss-Clements, founder of Yorkshire Coastal Cottages. She also suggests buying an established holiday let so you can inherit existing bookings and an instant revenue stream. Buying “oven ready” also poses less risk. What can seem like a bargain apartment may come with a “no holiday letting” clause in the lease.
In terms of rental potential, period houses are most popular as are those with beautiful décor. There are also key elements that holidaymakers will pay a premium for.
Susan Goss-Clements says: “Sea views are always in great demand as is outside space and people love a cottage with an open fire or wood-burning stove. Private parking is very useful and we also find that hot tubs are very popular.”
While there is a market for all sizes of holiday let, properties that sleep six are in demand as are large houses for family groups.
Investors should check rental yield - the average is six per cent – and the rules on using the property themselves, as this can reduce expenses claimed against tax. However, lettings agents will advise on alleviating the loss.