Many people are considering buying a holiday home right now. Many of those people are also confused as to where to start. You need to consider the type and quality of the building, of course, but you also need to consider things like accessibility, resale value, upkeep and more. This guide will, hopefully, answer some of your questions and get you started on the right path.
Before you can choose the right Holiday Home, you need to decide why you are buying it.
There are plenty of good reasons to buy a holiday home right now. Some people buy a holiday home specifically to bring in a rental income, and others want to use it for their own family holidays or special events. Still others see a 2nd home purely as a financial investment whose value will increase over time. Quite a few prefer a mixed-use holiday home where they can enjoy tome away but rent out when they are not using it. If the home can someday be sold at a profit, all the better!
If you are primarily interested in gaining a rental income, you’ll probably choose a different location than if you were buying a holiday home for your own use. Consider these factors carefully.
Where should you be looking for a Holiday Home?
Once you know what you want the property to achieve, the choice of location becomes easier. Access to the property is a huge factor. If you want a weekend get-away, it should be close to where you live and work during the week. If you want to gain the most rental income, it should be near holiday destinations and transport links. Consider how easy it will be to get to the property by road and rail. If you expect to rent it out, you should also consider how close the property is to an airport frequented by low cost airlines.
Next, consider what surrounds the property. Is there any local nightlife? Dining options? Beautiful scenery? Resorts, activities or historical attractions? How is the local climate – is there a ‘tourist season’ of good weather followed by a long ‘off-season’, or is the weather, nightlife and culture ‘popping’ all year round?
Consider the ‘ever decreasing circles’ method – Decide first on the country, then on the region or county, then a specific town, and finally a neighbourhood in that town. Now you know where to concentrate your search for appropriate properties.
Should you buy a holiday home overseas?
Many Brits have holiday homes in Spain, Turkey or even farther afield. The climate, the scenery and the low cost of living/holidaymaking make some overseas locations very attractive, but buying property in another country can be complex – especially after Brexit. Make sure you speak to a professional with experience in both that country and the UK.
What other factors should you consider when choosing a holiday home?
That will be a different answer for every person. What style of holiday home do you prefer? Are you looking for a stone-built rural farmhouse, a serviced apartment in a secure building?
Make a list of the ‘must haves’ for your ideal holiday home. Consider the relative importance of:
- Gardens, pools, decks and outdoor amenities
- Garages and outbuildings
- Apartment or stand-alone dwelling
- Number of bedrooms
- Security and privacy
- Cost of maintenance
- Access to services
Which of these issues are you willing to compromise on, and which are absolute necessities?
Can you live in a Holiday Home all year round?
In some countries yes, but not in the UK. UK law is clear that if a property is designated a ‘holiday home’, it cannot be occupied for the full 12 months of the year. This is because council tax is lower on holiday homes than permanent residences. If you plant to live in the ‘holiday’ home full time, you should make sure it isn’t a ‘holiday home’ when you buy it.
How can you judge the right time to buy a holiday home?
Again, there is no ‘one right answer’ for everyone. Financial experts and economists struggle to judge the best time to make real estate investments, and in the end, you have to decide when the right tome is for you individually. If you wait for ‘the perfect opportunity’, it might never arrive.
Some people are hesitant to buy during a market downturn. They worry about the future value of the property, and about finding financing. However, some of the best deals can be found during a downturn, and when the market swings up again, the value of your investment goes up with them. Historically speaking, you make the most profit when you buy at the bottom of the market. If it is a ‘buyer’s market’, it is good to be the buyer. But nothing is 100% predictable, and you may want to speak with a financial professional to decide if now is the right tome for you.
Does a holiday home make a wise investment?
This is the last time I’ll be saying this, but that depends on you and your situation. If you buy the right holiday home, manage it well and keep it rented out (or make plenty of use of it yourself), then it can be a great investment, bringing you financial rewards and personal enjoyment.
Second Estates reported not long ago that letting out a holiday home brings in an average of £22,281 per year. That is just the average – holiday homes in popular holiday destinations can make much more.
To make the most from your holiday home, though, you’ll need to treat it as a proper business. You’ll need to market it, attend to the needs of your guests, and keep the property clean, bright and well-appointed.
There can also be hidden costs. Using a letting agency manage the place is incredibly convenient, nut they will take a portion of the profits for themselves. Repairs may be needed before it can be rented out, and there is always the tax man to be paid.