Pros and Cons of Holiday Letting
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by: seanh
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Before you take the plunge you need to be absolutely certain a holiday let is right for you. You need to be clear about the specific benefits a holiday let can bring, and whether there are any downsides.
• One huge benefit is that having a holiday let enables you to buy your retirement home at today’s prices, and it will be paid for by the time you retire.
• One of the biggest benefits of a holiday let, of course, is that potentially it can be very lucrative! For example, there are holiday properties in Devon, Cornwall and Dorset which let easily for up to £1,200 per week at the height of the holiday season.
• Another major plus is the tax situation. A holiday let is treated as a business for tax purposes. This means that you can treat nearly all your costs as tax-deductible.
• A further benefit of the tax position is that any loss you make (and, let’s face it, you probably WILL make a loss in the initial period) can be offset against your income from other sources, if you wish.
So are there any downsides?
• The main downside that comes to most people’s minds, of course, is that as a rule the property can only be let at a profit for a very small part of the year. But this negative is offset to a large extent by the much higher weekly rents you can attract in the high season.
• Most costs for a holiday let are higher than for a buy-to-let – for example advertising costs and maintenance costs. In particular, if you decide to use an agent, they can take up to 30 per cent of your rental income. And customers nowadays expect high standards of furnishings and fittings: dishwashers, CD players and satellite TV are standard, not optional extras.
• A great deal of work is involved, especially if you decide NOT to use an agent. The place has to be cleaned to a sparkling standard between each letting, and clean bedlinen and towels provided. And with such a high turnover, there is a greater possibility of problems arising, which you have to sort out.
These are some of the things that you need to bear in mind before making your decision. But the minuses are far outweighed by the pluses. When looking for your holiday let mortgage, talk to your adviser and you will find there is plenty of help out there
About the Author
Sean Horton is a Director of Holiday Let Mortgages Go to www.holidayletmortgages.co.uk for more information
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