Do Holiday Lets Give The Best Property Returns?
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- Опубликовано: 29 авг 2024
- If you’re interested in buy to let property investing, no doubt at some point you’ve thought about buying and renting out a holiday home.
During the summer months, a holiday cottage can rent out for £1,000 a week, and there’s no permanent tenants to deal with. And with staycations on the rise in the UK, could holiday lets be the best way to invest in property?
Research from property fund Second Estates suggests that the average net yield on a holiday let is 6.1%, compared to 5.0% on a traditional buy-to-let - the true returns on investment being WAY higher than this when amplified by the use of a mortgage!
In this video, we’ve run the numbers on holiday lets to find out once and for all if they are worth it compared to just getting a regular buy-to-let property.
We’ll also lay out the mortgage and the tax rules, which are quite different from other types of rental property. And we’ll tell you the best places to buy holiday lets in the UK! Let’s check it out…
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Holiday let vs Standard Buy to Let, is the same as the Concentrated Unleveraged Portfolio vs Diversified Leveraged Portfolio debate.
Sure the provisional numbers looks good but how do you price the tail risk - how do you price being in an economic downturn for 2 years and ur vistor numbers falling by half? We have an economic downturn every 10 years so this is a very real outcome. Obviously not a risk u really have to underwrite for BTL given people will always need a place to live
I spent 3 months researching the market and was looking specifically at the Peak District. After my time spent researching & contacting channel managers and agents and calculating costs and potential ROI’s I realised I would hardly be any better off if at all than I am with any of my houses in my current portfolio of student HMO’s but with potentially more headaches. The future of course can’t be predicted but another COVID lockdown and bye bye rental income converting back to a BTL would decimate your income. I might reconsider in the future but only if I want to stay with my family in a specific area to holiday a week or 2 every year.
My uncle does this and his returns are alot higher. He bought a chalet in great Yarmouth for £14k and on going site fees of 2k. The chalet rents out at £600-800 from May to September. Also if you originally by it for yourself as a holiday home you can always rent it out later.
I heard those chalets and lodges charge high ground rents and they depreciate significantly in value. If you go to sell it you make a major loss.
and they say site fee go up 50% for some 😮
Have been looking for a video like this for a while, great useful content. Curious to know how numbers compare with a holiday let abroad now….
I think you missed a key point. That is the ethics to consider. Many popular tourist towns are now too expensive for the locals to ever dream of buying a home there. Folks thinking about buying a holiday let need to decide if they care about that or not. Sure, someone will buy a property if it goes on sale, but as with anything, knowing that someone else would do it if you didn't is something folks need to think about whether they're ok with.
Good point. Councils here in Wales are now considering a planning change requiring permission to change a house into a holiday let for this very reason.
Couldn't agree more. Where I live, communities have been pretty much destroyed because of a housing market based on the buying power of people who live hundreds of miles away.
@@ivorboner908 indeed. It's happening everywhere. I feel sorry for those that aren't on the property ladder yet. It's completely unfair. So much so it ought to be illegal. Except it isn't, because legislation is written by and for the wealthy.
Great vid. Any chance you can give us an update on your spreadbetting portfolio, how has it fared vs. normal position? How much buffer do you have now if the market turns?
I was also looking at a place called the highland club in Scotland on the banks of Loch Ness it seems to fetch a good return but obviously a short season
I saw this too. Would it be busy all year round though?
Almost all flats have clauses prohibiting short lets via clauses banning business use or minimum rent terms and the "change of use" is not considered for a house to single holiday let the changed nature of the communal areas mean in Scotland there have now been court decisions that mean it does require planning permission in flats with shared lifts ect.
If a BTL property is bought using a Ltd Company, then section 24 does not apply. i.e the interest part of the mortgage can be deducted
If you could let your holiday let fill time you typically would earn 4x more income than rent
This going to sound like a set up for joke but I swear it isnt, I used to know this chap who bought a field and bought 4 really nice contemporary looking wood cabins he reckons he bought all of it for 200k just outside the New Forest im not sure of the details but he was saying it was making a chunck of change and the occupancy was high and it diversified his risk by having four rathet than jyst 1.
Have seen a lot of sponsored ads around recently around investing in car parking spaces in the UK. Would be good to get your opinions on it.
Not heard of that one, I'll have to look into it! Ben
Its better to buy a complex, live on site as you can keep more costs in house
Great video guys. I think there's too much uncertainty in the tourism industry at the moment but it would be interesting to see what you think about foreign properties in this space when all the nonsense calms down. Once the restrictions have gone I suspect the domestic market might collapse
Best places are across Wales, Cornwall, Devon, edinburgh and Lake district
Also Scottish highlands. Avoid Cornwall like the plague it’s a total rip off.
Hour about leaving the scarce properties for the people from there? Your luxery deprives them of a necessity.
Thanks learned something new 👍🏻
The revenue looks great but costs.....
Will definitely need a cleaner for starters
What does everyone think of log cabin investments that are used as holiday lets. Lower price, lower capital gains but healthy rental yields, lots of facilities around too
Unlikely to get the same capital gains and security as a bricks and mortar investment
I was researching this too. Those cabins charge high ground rents and decrease in value.
You earn more but also have to pay alot to maintain
Great stuff , very informative I’m considering moving to Ireland and buying a place with an annex or building an annex as I’m a builder
It's a whole different situation in Ireland. 15 weeks bookings is good for over there.
Great video guys. I think its a great investment. I live in Pembrokeshire which combines the seaside and a National Park. Even very bog standard small properties rent for 1k+ per week in peak weeks here. Many let for 2k easily and even more. The season is getting longer every year and whilst we have had a manic 2 years of staycations, I think the trend is set to continue even when people return to foreign resorts. There are too many Brits now who are conscious of climate change and want to support British.
Great news for the local Welsh people who just want a home - not!
We have bought a Holiday Let in a Prime location in Snowdonia Wales. Already set up ready to go. Properties are cheap and will make 1K a week in peak season. Turnover 25K/year even on lower occupancy.
After bills/ Morgage/ management makes 12K profit a year. This is way way higher than any standard BTL property.
I was thinking of doing this. Do you get bookings all year round? Also do you manage the property yourself?
@@wulfsorenson8859 managed by Sykes as we live 3 hrs away but should generate and has previous generated 25K a year. But it’s a specialist Mortgage needed and u need to fully furnish etc
@@alecsavory9227 Did you get a buy to let mortgage? I have heard first hand how Snowdonia is very good for holiday lets and how lucrative. Cornwall is now wat over priced so I’m also looking around Loch Ness and the Highlands.
@@wulfsorenson8859 it must be A mortgage for a holiday let property. A normal BTL mortgage will not cover it properly
Killing our culture and future for your private profit. Why not stick to your own country?
No wifi or council tax on the bills?
Council Tax is in interesting one. If you meet certain occupancy requirements here in Wales and you do not use the property yourself, you can qualify for business rates instead of council tax. You then also qualify for small business rates relief so for us it was about £300 a year instead of well over £2k for council tax. Councils are looking to clamp down on this as many second home owners have been exploiting it. If you do end up paying council tax, councils in Wales have doubled it in some cases for 2nd home owners. Councils under pressure to turn the screw on this further.
Business rates on a holiday let. And these ones were below a threshold and had nothing to pay
You Can Invest in Everything Cause You are Loaded.
Bald presenter just put me off this entire video. He needs to try less and chill out on the eyebrows