Investing in holiday lets
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Investing in holiday lets

Although the residential buy-to-let market is far from dead, the short-term letting market is looking rather more lively.

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Investing in holiday lets

Although the residential buy-to-let market is far from dead, the short-term letting market is looking rather more lively. While the term "short-term let" can actually cover a variety of options, such as city lettings to business people and exchange students, holiday lets in the countryside are likely to be the safest option as well as potentially very lucrative.

Holiday lets and the law

Holiday lets are classed as commercial property, which not only means that landlords can ignore the numerous regulations which apply to the residential buy-to-let market but that they can class their investment property as a business without having to go through the expense and hassle of setting up a limited company in which to hold it.

This means, for example, that the landlord will pay business rates instead of council tax (and may be able to claim an exemption to them), plus they can claim tax relief on expenses such as mortgage interest, furniture, fittings and fixtures and potentially Capital Gains Tax as well.

Investors may, however, wish to be wary about potential changes to the law (at national or local level) to clamp down on short-term lets in cities, especially holiday lets. Cities are places where demand for property is at its very highest and local residents (who have votes) are often becoming increasingly vocal about the fact that people who wish to live in a city are being "pushed out" by tourists.

It probably isn't helping that some landlords are clearly doing a poor job of managing their properties with the result that people living in neighbouring properties are being genuinely inconvenienced by residential flats being turned into "party flats" with all that implies. In the countryside, however, tourism is often crucial to the local economy and short-term holiday lets are much more likely to be welcomed.

The practicalities of holiday lets

In many ways, holiday lets follow the same dynamics as the residential property market (and investment in general). Fundamentally, a large part of your success will come down to your ability to find the right property, buy it at the right price and charge the right rent.

There are, however, some very significant differences between holiday lets and residential buy-to-lets. Here is a quick guide to the main ones.

Holiday lets need serious marketing

Forget about just sticking a few photos on Airbnb and waiting for the bookings to roll in. You need to market your property to the max, ideally with professional photos (or at least photos taken with something better than a mobile phone camera) and highly-engaging text.

Holiday lets need a high level of maintenance

As an absolute minimum, you're going to need to turn-over the property on a much more regular basis than you would a residential buy-to-let.

In principle, you can run the property on the basis that guests look after their own laundry, cleaning and meals but in practice you may find that you get more bookings if you can at least offer the option of having someone take care of that for them, which means you may need to pay for help.

Holiday lets need to be luxurious

Even if you're pitching to the environmentally-aware, holiday homes typically benefit from being perceived as luxurious relative to their price point.

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This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
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