Hugh Ellins, Associate in our Commercial Team, talks pros and cons of owing your own holiday let!
At this time of year some of us have already been away to our favourite part of the country for a break or are looking forward to that break.
Whether it is beside the sea or in the depths of the countryside, at some point a member of the family will say:
“Wouldn’t it be lovely to own a property in this area. We could rent it to ourselves when we wanted and otherwise rent it out which would mean that it would cost us nothing and would appreciate in value.”
This is usually said when mellowed by a couple of glasses of the favourite tipple whilst looking at a splendid sea, or land, scape into a magnificent sunset.
Is owning a holiday home such a good idea?
The upside is that you can have a place in an area which you and the family like and which can be visited whenever you like – subject to other holiday lets. Yes, it will give you an income and it might, depending on location, appreciate in value.
However, there are a lot of downsides, some of which are:
1. There is no guarantee that you can let the place week in week out. There are some areas in which you so do. Recently, we stayed in a tiny two-bedroomed property in Salcombe. It took four adults but it was a good job we were of the same family. Being interested in property and returns and investment, I checked to see how often the property was let. Yes, it was let 52 weeks a year but, on looking at an estate agent’s window, it would have cost about £1,000,000 to buy.
2. Even if you can let the property all year, frequently a rental out of season is small.
3. There is no guarantee that there will be capital growth. I doubt that some of the beautifully isolated properties in North Wales, however wonderful the view, appreciate greatly.
4. People are becoming more demanding on specification and general standards. Most of us have stayed in some shabby if not slightly dirty places where things do not work. Strange that these are the places that you can usually get on very short notice.
5. How do you handle the lettings? Via a full-blown agency or through the increasingly popular internet platforms where owners handle the process?
6. Unless you live close-by, how do you ensure there is a proper handover procedure and cleaning of the premises between lettings, or inspections for breakages?
7. How do you organise maintenance? We all know the difficulty of getting anyone to do jobs around your main house. By the way, does anybody know a fencing contractor?
8. There is, of course, the cost of buying the property which is made greater by the 3% surcharge on Stamp Duty Land Tax on second homes!