Buying a holiday home can be a potentially good idea whether it is merely for the pleasure of your family and friends, or for a bit of cash coming to pay for your holiday getaway. But these days, everyone is getting savvy, everyone is looking to see how they can make their investments pay, which takes a bit of thought and planning.
We know more than a bit about caravan holidays, but when it comes down to investing in a holiday property we cannot claim to be experts. So, for the benefit of our site visitors, we’ve had a look at what the experts have to say on the matter.
Thisimoney.co.uk are an award winning financial website, so we thought we’d have a look what they say as a ‘guide to renting a holiday home success’ (note, guide, not guarantee). They’ve got seven top tips, which are as follows. This guide applies to holiday homes in general, but is applicable to caravan holiday letting, and we’ve adapted the guide a little.
1. Location, location, location.
It goes without saying that you don’t want to advertise sunny beach holidays linked to an arctic cottage. The best choices are mainly down to climate, and include among others, Devon and Cornwall, and East Anglia. We can add to that list Dorset, Sussex, and the rest of the south coast of England including the Isle of Wight.
Longer periods of sunshine should mean higher potential occupancy. If you buy a holiday park home somewhere like the Lake District you may get year-round rentals from walkers.
2. Property type.
Many of the big names now offer lodges for sale as well as caravans. If the property you buy has an outside patio area that gives more scope for offering that little bit extra to holiday makers. Check with the site owners to see if barbecues are allowed, and is there the potential for a hot-tub? Do remember that there will always be a maximum ceiling of rental that you can charge, installing gold taps in the bathroom will not really add value!
3. Setting up with the right facilities.
Do the premises contain the right facilities. Would you be happy with ‘that oven’? Would a TV satellite add value? Is the decor a bit out of date, in need of a revamp and a lick of paint? Would a pair of binoculars for guests be a nice touch? If you buy a new lodge you probably will have to worry less about these things – that’s one for the balance sheets.
4. Using a letting agent.
They charge around 15 – 20% and there may be an extra cost for handling laundry. Look at the terms and conditions of the park operators’ schemes as they do vary. If you live literally just around the corner you may be able to handle the whole thing yourself, but bear in mind it’s a season long commitment.
If you don’t live around the corner, using the letting scheme is definitely worth considering, as apart from changeovers there is the marketing, booking and banking to consider. Their fee is tax-deductible.
5. Contingency.
The property may not be rented out for the whole season, things will need replacing, and a fresh lick of paint now and then will be a must if you want visitors to keep coming back. So, when you do your financial forecasts before committing make sure you factor everything in.
6. Property insurance
The Association of British Insurers say legal claims are incredibly rare, but it’s not worth taking a risk. Good owners buy property and contents cover plus public liability insurance, typically up to £500,000.
7. Tax deductions
Tax rules have changed. For a holiday park home to be considered a Furnished Holiday Letting — the best tax status — it must be available for rental for a minimum of 210 days per year and should be occupied for at least 105 days per year. Most parks are open for this period, but always check the small print.
As noted, this is a guide, but always get your own thinking cap on, and most importantly, get your calculator out, especially if you don’t have the cash and are thinking of using a finance package.
By: Gareth Whieldon
