Have you ever dreamed of owning a second home, running a holiday home or property in the uk or abroad? It can be a very lucrative business, however you need to plan a property investment correctly.
Plan you finances correctly, make sure you can afford a property and the running and maintenance costs. Do you need a buy to let mortgage ? Factor in costs of the letting agent or travel company fees eg cottages for hire or villas abroad.
Most importantly you need to research where you are going to buy a second home. Is there good transport? Is it an all year round destination? Will there be periods of no occupancy? Is there a lot of competition? Is the area saturated already with holiday homes or is it an up and coming area?
Running holiday home in Britain
Did you know there are over 500,000 holiday homes in Britain alone, many are rented out.
Top tips for owning holiday homes in Britain:-
1. Choose a good location. Devon and Cornwall are popular, but most holiday homes are let for no more than 20 weeks a year. Rents from a Cumbrian hideaway will be less than for one in the South-West, but year-round walking holidays mean many homes in Cumbria are let for 35 weeks or more.
2. Buy a two- or three-bedroom property. Most holiday lets in Britain are booked by families. Buying a one-bedroom flat to let will restrict your potential market. Huge seven-bedroom houses may sound good but only 15 per cent of bookings require more than three bedrooms, say holiday letting firms.
3. Pick an interest-only mortgage. Interest on loans for a rented-out second home can be set against tax, so if you have a lump sum to invest it’s best to pay the largest amount off your main home loan, and get a small-deposit, interest-only mortgage for the country cottage. Seek financial advice.
4. Hire a letting agent or be prepared for hard work. Managing a holiday home involves repairs, passing keys to tenants, changing linen at weekends, grass-cutting, advertising, plus dealing with emergencies such as visitors locked out or requiring medical help. Do you want that aggro? If not, pay the management fees of between 15 and 30 per cent that most agencies charge. National firms such as the Holiday Cottages Group and local firms like Devon’s Toad Hall Cottages and Scotland’s Scotsell all report the internet providing more than half of bookings.
5. Keep the property up to date. Dishwashers and CD players are no longer luxuries. More importantly, the fire regulations mean that extinguishers and flame-resistant furniture are musts too.
6. Get the right cover. Letting agents often insist on public liability insurance of £1m plus, costing between £200 and £450 a year.
7. Keep your finances in order. Much of your costs on management fees, insurance, repairs, decoration and essential travel to and from the house can be set against tax and offset against non-property tax bills.
