Investing in a holiday home in the UK

The temptation to invest in a second home for the purpose of holiday letting may be an attractive option as you seek to capitalise on your savings.

Before delving into the property market once again, however, it is important to consider what kind of returns you can expect, as well as where the best locations are.

Good returns for holiday lets

According to Schofields Holiday Home Insurance, there are 245,384 registered second homes in the UK.

In 2011, there were 6,212 more second homes bought, representing a 2.6 per cent climb on 2008, when the financial crisis kicked in and demand weakened.

Chief executive of Assetz Stuart Law suggested an investment in prime locations could provide strong returns for holiday lets with gross yields of approximately eight per cent.

He wrote for the company’s blog: “Buy to let investors purchasing in good areas should see some positive growth next year in pricing as well as getting rental growth of around five per cent.”

However, he highlighted that a rental growth of five per cent supports a price hike of the same amount “provided the yield percentage remains the same”.

Mr Law added that shortages in UK housing stock in good locations was set to continue for at least ten years in light of the fact there is little construction taking place.

Despite this, investors could unearth a great property that would prove profitable for which a contract is almost a prerequisite.

Get it in writing

Lawpack’s holiday letting agreement should be used for the short-term let of a furnished property to allow you to draw up a strong agreement that provides protection to you and your tenants.

This agreement has been approved by Anthony Gold Solicitors, marking it out as up to date and legally binding.

It will cover such issues as rental amount, the sum of the deposit and the tenant’s obligation to keep the property in good shape, as well as provisions on the landlord’s access.

Holiday let hotspots for 2012

So now you know a little about holiday rental agreements, it's best to consider where is hot for a second property in 2012.

According to Andy Edmonds, editor of Travellikeabrit.co.uk, top locations include Dorset, Devon, and Abbotsbury Swannery.

He added that Brighton could prove popular as a party destination where visitors are “spoilt for choice”.

Of course London is always a competitive area for a second home for the buy to let investor as it attracts millions of visitors every year.

That is perhaps no truer than in 2012 with the Queen’s Diamond Jubilee and the arrival of the 2012 Olympic Games.

Enterprise manager of the National Trust’s Scotney Castle Joe Lloyd suggested the events would draw in visitors who would then go on to explore the rest of the UK.

He said: “I think people will tend to travel a bit further afield as well.

“Once you’ve seen something at the Olympics perhaps you’d like to travel out and see what the rest of the country is like. Everyone I have spoken to is very excited about this year.”

Stuart Law pointed out that the Lake District is another winner considering owners here can benefit from a 40 to 50 week season.

With all that in mind, the next step is downloading that holiday rental agreement and making the most of your second home.

Other information


Published on: May 11, 2012

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