Landlords can make 21% more by switching to holiday lets



Landlords could increase their rental income by a massive 21% by targeting the short-term holiday let market over the traditional rental market, research by broker Revolution Brokers has found.

In England, the average monthly rent is currently £943, but the average for a holiday let is £1,137, a premium of 21%.

Cornwall is a popular destination for holiday lets

In the South West, for example, where you’ll find popular holiday destinations such as Cornwall and Devon, the holiday let premium is 35%, followed by the East Midlands (30%), North East (24%), and West Midlands (24%).

This big incentive to get into holiday lets explains why there’s concerns about there being too many holiday lets in tourist-heavy areas, taking away stock from local renters.

Almas Uddin, founding director of Revolution Brokers, said: “The rise of Airbnb and other similar platforms has brought holiday lets to the forefront of people’s minds when they’re travelling around the UK.

“No longer are hotels the first point of enquiry and while Airbnb has opened the door for non-professional landlords to earn money from their home – following strict guidelines in the process – the increased awareness has created a huge opportunity for professional investors who want to secure better yields than they may be able to do within the regular buy-to-let market.

“Location is obviously all important for a successful holiday let – the potential for extensive void periods means they’re best suited to cities and popular holiday destinations local coastal or historic towns where demand is going to be reliable for much of the year.

“We recently oversaw the financing of a short term let investment in Cornwall with a yield of 18.5% versus the average of 4% across the wider area, so they can be incredibly lucrative.”

While it may seem like a no brainer to get into holiday lets, Revolution Brokers said there are four challenges to overcome.

The risk of void periods is higher, the landlord is responsible for bills and utilities, while mortgage interest rates tend to be higher.

There’s also a rulebook to consider, as the property must be available to rent for at least 210 days a year and no single let can last for more than 31 continuous days.

Mortgage providers will often want to know that you intend to make the property available for holiday lets and existing providers may want to change the terms of your deal.

Government guidance on holiday lets is here.

 

Comments 4

  1. Really? A massive 21% increase in rent. What about extra risks? what about additional administration? what about extra cleaning and wear and tear on furnishing? what about cost of furnishings to make it suitable for holiday accommodation? what about voids? what about utility and council tax costs? Yes holiday lets might get you away from the Government’s TOXIC abolition of S21.

  2. With the short term swing from staycation to overseas holidays and in the long term the cost of living crisis, energy crisis, fuel crisis and upcoming major recession impacting middle class disposable income I have a feeling long term rentals will be a safer bet in the next 3 – 5 years. There are going to be bigger and bigger voids for AirBnB landlords meaning the suggested 21% (before initial outlay to furnish etc, management fees, cleaning fees, energy costs etc etc are taken out) is going to be much much lower.
    Would you go for a 2 year or 5 year mortgage right now?

  3. I think we are seeing right now that climate change is going to make staycations more popular not less here in uk

    It’s getting warmer for longer

    Having just taken two holidays in last month to Greece and Spain I can say both were ok but madly marred by flights in middle of night and the resorts were both rip offs big style
    We are not the only country with hyper inflation
    In Santorini I paid 17 euros for a tiny Stella and a tiny Diet Coke…unreal

    But everyone must make there own decisions

    Concerning mortgages
    The last time inflation hit 9.1 % apparently was in 1982 and interest rates then were at 13%!!!
    BOE needs to do that now but are shit scared of the interest bill for the government on the 900 billion of money printing that the BOE engaged in over last 2 years…
    IDIOTS..
    Technically it is easily possible for UK to go bust anytime soon.
    If you read the news you will know that Boris has ordered a review into the mortgage market. He feels we should all be able to fix for 30-40 years like they do in the states.
    If that happens house prices will FLY upwards like we have never seen before BUT in USA prices are starting to tumble as were unsustainable
    SO
    If I was borrowing in TODAYS scenario I would accept nothing less than 10 year fix.and kick myself if 30 years becomes available anytime soon
    The government need high house prices. Looks good on Treasury balance sheet. Not so good for the borrowers.
    Hope this helps

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