#house to let
How to buy and run a successful holiday home let
Buying a holiday home to let could actually be far more lucrative than owning a property you rent out.
According to figures from specialist broker Holiday Let Mortgages, if you own property in sought-after locations you could pocket three times the annual income of a buy-to-let investor.
Holiday let mortgages
Only a handful of lenders lend on holiday lets. These include Cumberland Building Society, Leeds Building Society and Monmouthshire Building Society.
Going to a mortgage broker might be your best bet a good broker will know which lenders to approach.
Big high street lenders tend to steer clear of holiday lets due to the sporadic nature of the rental income.
Deposits and letting income for holiday let mortgages
As with buy-to-let, deposit requirement for holiday lets are higher than for residential home loans. Cumberland Building Society, for example, requires a minimum deposit of 25%, while Leeds Building Society looks for 30%.
Lenders will also require the letting income to be a certain percentage over and above the annual mortgage interest. Cumberland requires the rental income, after agent s commission, to be at least 125% of the mortgage interest, calculated at an interest rate of 6%.
Lenders will generally require holiday let landlords to own another property and some will require a minimum personal income too Monmouthshire requires holiday let borrowers to earn at least 40,000 a year from their job for example.
How much can you make?
At a quick glance it can seem that holiday let landlords are raking it in compared to landlords letting property to tenants.
Take a three-bedroom holiday cottage in Cromer, Norfolk, for example. According to holidaylettings.co.uk. owners can rake in anything from 460 to 825 a week.
A look at rentals on Rightmove suggests a three-bed property in Cromer generally rents for 800 to 1,100 a month.
However, it s important to understand that income from a holiday let won t be regular or guaranteed.
While you might be able to command high rents in holiday periods, you may have void periods at other times of year.
Profit and tax
Holiday lets are much more time consuming and expensive to run than standard buy-to-lets.
The property will need to be cleaned, and the linen changed, in between guests. Depending on whether you live near the property, you might need to hire a local cleaner to do this.
The same goes for checking in guests and handing over keys hiring a local agent to do this will eat into your profit.
Holiday homes tend to be furnished to a high standard with all mod-cons. Wi-Fi is a must, as is a television.
You will also need public liability insurance to cover any injuries to guests or staff such as cleaners, as well as the usual buildings and contents cover.
All of these costs will eat into your profit. However, they will be tax deductible.
How to pick an area to invest in
Holidaymakers have very different needs to permanent tenants. The more people you will appeal to, the more in demand your property will be.
So think about making your holiday let both child and dog friendly.
Investors might be tempted to pick an area where they like to visit themselves. But bear in mind if you stay in the property during peak periods you ll be missing out on rental income.
How to advertise for guests
Firstly there are a number of specialist holiday home websites such as ownersdirect.co.uk. holidaycottages.co.uk and holidaylettings.co.uk. You will normally need to pay to list your property.
Alternatively home rental sites such as Airbnb and Wimdu allow you to list your property for free but the site will take a cut of the booking fees you receive.