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Self-catering holidays are becoming more and more popular among British holidaymakers. We’re flocking in our millions to rented holiday cottages, villas and apartments across Europe as well as in the UK. Many people are taking advantage of this and buying properties in popular holiday destinations in order to let them out for a profit – and get the benefit of the property themselves as well. For those considering property investment, letting a holiday home can be much more profitable than a standard, year-round buy-to-let property if you purchase in a sought-after holiday destination – where owners can easily command as much rent from their holiday home in one week over the peak summer period as a landlord of a standard residential let can in a month. There are other financial advantages to purchasing a holiday home rather than a residential let. If the property is furnished and available to let for at least half of the year and isn’t occupied by the same person for more than one month of the year, it can be considered a business asset and will receive the tax relief associated with this, such as a significant reduction in capital gains tax should the property be sold. And of course, if it’s considered a business property rather than part of a personal estate, it won’t be subject to inheritance tax laws. However, the nature of holiday properties means that they can often be left unlet for a great deal of the year and it can be difficult to attract people off-season. Try to choose a property in a location that has a year-round appeal, such as a mountain resort in France that’s popular for winter skiing as well as summer hiking, or, closer to home, a cottage close to mountain facilities in Scotland. Alternatively, city breaks tend to be popular all year round, so you could opt for a city centre apartment in a lively UK or European city. Remember that you’ll have to be at hand (or employ someone if you can’t be there) to prepare the property for each new guest who arrives – unlike longer-term lets where you should only need contact with the tenant in the event of a problem. The next big question is how you will finance the purchase of a second property. Some people opt for a buy-to-let mortgage. This type of mortgage is becoming increasingly popular as more and more people are catching onto the property game. However, as you will probably have a mortgage on your own home already, most lenders will want reassurance that you can afford to pay two mortgages in the event that your second property remains unlet (which can often be the case with holiday homes). If you’re struggling to get a buy-to-let mortgage, another option is to remortgage your own home. If you have enough equity in your property, this can be a great way of raising funds for your holiday home. There are lots of online mortgage lenders that offer excellent deals for those looking to remortgage or refinance their homes for any reason. This article is copyright protected and is not for republishing |
