Holiday home/lodge buy to let

[davidpstock]

Anyone got experience of buying a holiday home/ lodge with a view to letting it out?
I've seen a couple of places offering 7% net return if you don't want to use it yourself.
I expect it would have to be in an area that people will go to year round to make it viable.

[Eric Mc]

For tax purposes, it's handled more like a trading business rather than a simple "Buy to Let" so you do need to brush up on the differences.

[mikeh501]

looking at doing somehing similar ourselves. you can still get mortgage tax relief with a commercial holiday let. the mortgage side works a bit different than BTL in terms of affordability/stress tests etc.

[davidpstock]

Were hoping to do it mortgage free, depending on cost. A house to BTL would need a mortgage to finance it.

[red_slr]

We are also mulling things over. This was after trying to find a nice house for a week in the summer at some point this year to see all the nice places are booked up for 2 or even 3 years ahead. A lot of the nicer places in good locations have literally zero availability and demanding pretty good prices too.

I can see a decent 3 bed on the beach bringing in at least £4k a month year round.

[davidpstock]

red_slr said:

This was after trying to find a nice house for a week in the summer at some point this year to see all the nice places are booked up for 2 or even 3 years ahead. A lot of the nicer places in good locations have literally zero availability and demanding pretty good prices too.

I can see a decent 3 bed on the beach bringing in at least £4k a month year round.

Out of interest, where have you been looking? We need a good location that has year round appeal. Not limiting it to seaside, as the popular places will be expensive to buy.

[davidpstock]

Eric Mc said:

For tax purposes, it's handled more like a trading business rather than a simple "Buy to Let" so you do need to brush up on the differences.

If I understand correctly, as a business there is no council tax, and full business rate relief if rateable value is below £12000.

[red_slr]

davidpstock said:

red_slr said:

This was after trying to find a nice house for a week in the summer at some point this year to see all the nice places are booked up for 2 or even 3 years ahead. A lot of the nicer places in good locations have literally zero availability and demanding pretty good prices too.

I can see a decent 3 bed on the beach bringing in at least £4k a month year round.

Out of interest, where have you been looking? We need a good location that has year round appeal. Not limiting it to seaside, as the popular places will be expensive to buy.

Anglesey along the north coast.

Also some areas of Cornwall although demand was not as high.

[Eric Mc]

I wouldn't be up to speed on local taxes and charges. I was thinking more of the Income Tax and NI rules relating to profits from the enterprise.

[Mezger]

red_slr said:

Anglesey along the north coast.

Also some areas of Cornwall although demand was not as high.

48k per year for Anglesey? Assume that's Air BnB with a very high occupancy %. What does a 3 bed that can produce that type of return cost?

[red_slr]

When I looked seriously (few months ago) there was very little on the market. I got the feeling something ready to rent which is done to a high spec would be IRO £400-450k on the beach depending on exact location, something that needed the work doing maybe £300k.

Not looked on air bnb this was all via well known holiday let websites.

[kurt535]

I owned a house in southwold about 100m from the beach.

occupancy was @ 30 weeks p/y

weekly cleaners fees took the michael
agency booking fees + vat took the michael

If you do it, AirBnB well worth investigating; i know a lot of owners who have migrated to it from agencies and haven't looked back.

[GT03ROB]

kurt535 said:

I owned a house in southwold about 100m from the beach.

occupancy was @ 30 weeks p/y

weekly cleaners fees took the michael
agency booking fees + vat took the michael

If you do it, AirBnB well worth investigating; i know a lot of owners who have migrated to it from agencies and haven't looked back.

What sort of fee's are you paying for AirBnB? I took a look at for the holiday cottage we have & seemed to be not far off the agency we have been using. We've been running 80% occupancy year to date.

[kurt535]

GT03ROB said:

kurt535 said:

I owned a house in southwold about 100m from the beach.

occupancy was @ 30 weeks p/y

weekly cleaners fees took the michael
agency booking fees + vat took the michael

If you do it, AirBnB well worth investigating; i know a lot of owners who have migrated to it from agencies and haven't looked back.

What sort of fee's are you paying for AirBnB? I took a look at for the holiday cottage we have & seemed to be not far off the agency we have been using. We've been running 80% occupancy year to date.

Hi GT; not me, other owners. I sold my house to get an easier return on capital in other locations. Unless you live in the same town to keep an eye on the house, it can be quite um, challenging!

[Sticks.]

kurt535 said:

I owned a house in southwold about 100m from the beach.

occupancy was @ 30 weeks p/y

weekly cleaners fees took the michael
agency booking fees + vat took the michael

This chimes with my experience - although I have a good and reasonable cleaner now.

Rental income won't be as good as you expect, and overheads will be greater. Eg I don't bother with Jan-Feb bookings now, the heating costs, combined with the low rents make the margin too small. People will leave the heating on high 24/7, even when they leave.

One of the issues is that if any of your white goods fails, a repair person coming next week is no good if you've people coming today so a new one it is then.

Do many families visit seaside resorts in Winter? Couples, maybe. I chose somewhere with something of interest pretty well all year - arts festival, jazz festival, Christmas (and shopping), plenty of places to eat, history, nature reserve, beach. Self catering isn't for everyone and holidays abroad can look cheap by comparison.

And a 3 bed might be OK, but I aimed for a 2 bed. It's big enough for a family, or more often, 2 couples, but still cheap enough for 1 couple (up to 50% of bookings). A big place can encourage groups of drinkers, and if it's very expensive you get into 'so what, we paid a lot, your problem' with mess/damage.

I'm not sure the business rate issue is as clear cut as that.

The point is, success is not a given, it'll depend on what you do where and who you aim it at. A friend has a 1 bed annex, his usual (cheap) cleaner, and is full all year, other places are £3/4m, not often let and it's all about the investment value.

It is rewarding though. As a complete amateur, when someone comes all the way from Oz it's a good feeling. When they come back the following year, that's cool. I've guests from Oregon at the moment.

That's just my experience fwiw.