How many of us have yearned for a holiday home of our own? Whenever I’m away from home I can barely make it past an estate agent’s window without straining to see what’s available and at what price, but what does it actually take to start a holiday let?
It seems to make perfect sense to own a holiday home – as more and more people are choosing a holiday rental over a hotel or B&B for their holiday accommodation (what’s not to like about more space and the freedom of self-catering facilities, and usually on a cheaper per-night basis?).
There are also considerable advantages of holiday letting a property versus traditional buy-to-lets but there are many elements to consider before jumping in and making a potentially rash decision.
How to start a holiday let – Key considerations
- What is your main objective in buying the holiday let?
Is the property purely an investment or more of a holiday escape for you (with any lets seen as a contribution towards the bills)? The more time you plan spend in the property the more you can afford to fall in love with a particular home or area. If it needs to make money for you, you’ll need to undertake research to understand if there is genuine potential to holiday let locally and who might be the best target audience – is there easy access to the great outdoors with potential for walkers or perhaps seaside breaks for families?
As with buying any property, location will have a huge influence so if you’re interested in coastal resorts, a sea view can make all the difference. What attractions are you close to? What might draw attention to your property?
What rates can be achieved and for how many weeks of the year? Do your sums to understand if it makes sense financially as buying a property is likely to be one of your biggest decisions you can face. Talk to local agencies for their advice on what is in demand and what are reasonable rental prices – it’s in their interest to offer helpful advice as they might well be marketing your property in the future! They should also be able to talk to you about who visits locally and where could be the right spot to buy.
- How hands-on are you likely to be and how much support will you want?
If you’re based in London, but are looking at buying on the coast you’ll need significant help to handle guests and to keep your property in tip-top condition.
How will you handle check-ins and who will provide the house-keeping support? If you are local you might want to consider cutting your costs by managing these elements yourself, but make sure you have a back-up plan for when you’re away on holiday or don’t fancy washing the linen. Any local agency worth their salt will offer to check-in the guests (a meet-and-greet on arrival will enable the guests to quickly understand the facilities of the property and therefore start relaxing immediately – first impressions generally last so if they have difficulties on arrival it won’t bode well for the TripAdvisor review or future re-booking!)
- Cover your legal bases
It’s very easy to get swept away with your emotions when starting a holiday let, but you’ll need to give sufficient attention to the legal elements in order to avoid future difficulties. For example, if you are buying a leasehold property are there restrictions which could prohibit holiday lets? It pays to ask explicit questions early in the buying process to avoid disappointment closer to completion.
You’ll need the right holiday lettings insurance policy even when security deposits are taken (you may never need to make a claim, but the consequences of a major leak or other damage could be significant) and you must also get a landlord’s inspection for any gas boilers. Local fire officers are also likely to be helpful with a fire risk assessment.
- Facilities, furnishings and decorations
Ah, the fun bit! It shouldn’t be all about what might go wrong, but instead how you and your guests can get the most out of precious time away from home.
Standards for self-catering accommodation have risen significantly over recent years and TripAdvisor has contributed by allowing guests to provide feedback on specific properties. Simple and rustic might work well on a remote hillside, but holiday-makers are much more discerning and will rightfully want to spend time in their accommodation and not feel compelled to head straight out.
Good local agencies will show you around some of their properties to give you a feel for different standards and should give you recommendations (and perhaps even an example inventory). You have to consider your costs (after all, you’ll need to make it back in rentals), so it shouldn’t all be John Lewis, but neither should it be blanket IKEA.
To avoid? Light carpets, non-washables covers and irreplaceable personal items
Essentials? WiFi, fire resistant furnishings and a thorough welcome pack (highlighting facilities within the property as well as things to do and places to eat locally, etc). The welcome pack will help improve the guest experience and reduce calls asking for help on how to work the TV!
The bedrooms must feel of hotel-quality so don’t scrimp on bedding – good quality duvets, pillows and toppers/protectors. The best agencies will provide pressed, white linen and towels as part of their service options and this proves popular with both guests and owners for a reason!
- Make the most of your investment through effective marketing
It’s no good having the best located and furnished property this side of the Channel if no one gets to hear about it or, indeed, see it in all its glory on the internet.
You’ll need fabulous photography to show it off in its best light and then you’ll need to consider the best way to get in front of people who will appreciate your property.
Do you have the knowledge and capacity to fully exploit your holiday let? If not, consider talking to local experts who will market your property on their websites and also target the most advertising.
Here at Exclusively Eastbourne, the co-founders spent over 10 years each in marketing and PR, including for the likes of Expedia, so completely understand travellers and how to best find and talk to them.
- Enjoy the tax benefits
No, this isn’t about dodgy Panamanian off-shoring, just the genuine, perfectly legal position as laid out by HMRC – see their guidelines, and the many benefits available for holiday lets (and certainly versus the traditional buy-to-let model).
You’ll need to trigger certain occupancy conditions (such as being booked for at least 105 days per year), but holiday lets are not subject to the same crackdown on tax relief meaning that interest on mortgages can be claimed back – your accountant will be able to provide more details – also ask about capital allowances.
The bottom line is that you have the potential to make more more income versus buy-to-lets (thisismoney.co.uk recently talked about three times as much) and whilst costs will clearly be higher, good hands-on rental agencies will minimise hassle whilst managing costs for you.
Our experience is that owners will try one property as a holiday let and then be very pleasantly surprised with the income received, and either buy additional properties or convert buy-to-lets into holiday homes.