Thinking of investing in a holiday let? Here are some tips...
Investors are switching to tax-efficient holiday lets. Here are some tips on how to do it successfully.Summer has drawn to a close but the legacy of blue-sky thinking while on a fortnight’s break is making itself felt in the property market.Estate agents in popular coast and country locations report increased interest in buying a holiday let for pleasure and for potential profit.A holiday rental is now more tax efficient than a conventional let and there is the added benefit of being able to use it yourself.Cottages.com, which is based in Earby, near Skipton, saw a 23 per cent annual increase in the number of properties on their books in the first six months of this year and Visit Britain figures also mirror this rise.Cottages.com believe that tax-efficiency and a growing market for staycations are fuelling investor interest.Yorkshire is one of the destinations showing the largest growth in new holiday rental properties so buying the right place and making it stand out from the crowd is now vital.
If you are thinking of buying a holiday let in Yorkshire, here are some tips:Where to buy: Some holiday hotspots are busy year-round. Whitby is a classic example of this, as is York, though good properties come at a premium.Be adventurous and look further afield for lower prices.If you want to be by the sea, then Bridlington, Scarborough and Filey have a lot to offer and each has its own fan base.“Brid” has some of the lowest house prices on the coast and the terrain is flat, which makes it popular with older people and those with mobility issues. Its golden beaches are stunning and it has the historic old town, the Spa entertainment venue and the Leisure World fun pool. You can find good, one-bedroom flats for about £60,000.What to buy: Period properties with character are popular but so are contemporary homes and apartments. Large homes that sleep six or more are increasingly in demand for family get-togethers and for celebrations.Sea and beautiful rural views are always sought-after and the premium you pay should be worth it. The property will rent easily and it will also be easier to sell when you want to cash in your investment. Private parking is also a big tick in the box.Susan Goss-Clements, founder of Yorkshire Coastal Cottages, says buying a popular, established holiday let can be a good move as this means you can inherit existing bookings and an instant revenue stream.When buying an apartment, beware that it may come with a “no holiday letting” clause in the lease.When to buy: Spring is a key time for buying but this also means there is more competition. Start looking now and your holiday let could be up and running by Christmas and New Year, which is a popular time for rentals. It will also be ready for February half-term, which is the start of the season.Decor and amenities: There can be no slacking here. The let has to look good and be well-equipped and pristine. If not, reviews will be poor.It pays to invest in good decor and in comfort. Good quality mattresses and bedding is a must, as is a comfortable sofa and chairs.Wood flooring and tiles are practical and hard-wearing for the ground floor.If you have a hot tub you’ll get 31 per cent more bookings, according to Cottages.com,. However, make sure the tub is cleaned at every changeover. Good welcome packs are key to the visitor experience. Guests want wine and local produce along with cupboards stocked with essentials such as cooking oil, tea, coffee, milk, salt and pepper. Good wi-fi is now vital.Pets for lets: Dogs are fashionable thanks to a proliferation of spoodles and doodles and putting them in kennels is expensive. By accepting them you tap into a big market. Cottages.com say you should also expect 18 per cent more income.Marketing and managing: A good holiday rentals specialist should pay off. Expect to pay up to 30 per cent commission. Check out the website to see if it is easy to navigate and ranks high in Google searches. Visit the office if they have one, call them up and scrutinise the listings. Are their property photographs professionally taken? Are the details well-written, informative and compelling?Be flexible with dates: While renting a holiday home for a week or two used to be the norm, demand for short breaks and last-minute getaways is now popular.Taxes: Anything that is not a main residence, attracts an extra three per cent stamp duty. However, when you sell, capital gains tax is levied at 10 per cent, half that of conventional rentals.You can deduct holiday home expenses from taxable income generated by your furnished holiday let. These include refurbishment costs, insurance, utilities, mortgage interest and travel to the property. To qualify as a furnished holiday let, your property must be available at least 210 days of the year and has to be let for at least 105 days.