Why holiday properties still make wise investments
By MT Finance
Back in the summers of 2020 and 2021, when the list of foreign countries Brits could travel to was liable to change at any moment, securing a holiday let quickly became a top priority for those able to afford a break. While the so-called ‘staycation boom’ has regularly been declared as ‘over’ during the last year or so, there are plenty of indicators that suggest this isn’t the case. Instead, the sector seems to be going from strength to strength, presenting an opportunity for investors.
Demand continues amidst cost of living crisis
One of the biggest lifestyle trends to emerge from the pandemic, staycations have proved they can withstand competition from their overseas counterparts since the removal of covid restrictions. In fact, research carried out by Cofton holidays in March 2023 revealed that 73% of UK adults who are planning to go on holiday over the next 12 months will do so in the UK, up from 59%.
Out of these, seven in 10 are more likely to opt for non-urban locations, including coastal, rural and mountainous destinations. 34% of those interviewed said that the likelihood of them choosing a UK staycation over an international holiday had increased since the beginning of the pandemic and the cost of living crisis. The top reasons for this are that they are seen as easier to plan (63%), cheaper (51%) and easier to travel to (42%).
The rise of digital nomadism
Those looking to let out their properties for longer periods of time should also consider the rise of digital nomadism. Popularised by the pandemic, a digital nomad is someone who works remotely from a variety of different locations and is connected by the internet and technology. While some workers are being tempted by special visa schemes in European countries like Croatia, not to mention further afield, others are staying closer to home. Considering that Britain now has more than 4.8 million workers who class themselves as freelance according to IPSE (an increase of more than 20% since 2011), many of these will either be in need of makeshift offices or looking for a change of scenery.
An opportunity for investors and landlords
All of these factors are good news for those considering either renting out existing holiday lets or purchasing a property specifically for this purpose. Those who are considering buying somewhere new would be wise to pay attention to Sykes Holiday Cottages’ Holiday Letting Outlook Report 2023. Not only do they report that 84% of owners say bookings are stronger than ever – something they expect to continue over the next five years – but they also detail the top five earning regions in 2022. Cumbria and the Lake District came in at number one, followed by the Cotswolds, the Peak District, Cornwall and Dorset.
While location is undoubtedly important, it’s also worth considering what is included at the property. Three features which Sykes found had the potential to generate the most additional income were hot tubs, properties which accepted pets and wi-fi.
Solutions from MT Finance
If your client is looking to either purchase a holiday let or re-mortgage a current property, MT Finance is here to help. Our newly launched buy-to-let product – which is now available to all brokers and intermediaries in England and Wales – can be used for holiday lets; although planning and usage restrictions apply and rental income will be calculated in a standard AST basis.
Alternatively, if they need to move quickly then it could be that a bridging loan is the best option for them in the short-term. With terms available between one and 24 months, this would give them the breathing space they need to secure their property before exiting onto longer-term finance. Our lack of exit fees or early repayment charges provide extra flexibility.
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