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Holiday Lets – Are They The Best Investment?

Written by Sam Jones on 03 January 2013.

Buying a holiday home on the promise of high returns and occupancy rates may seem enticing, but there are risks for buyers who do not choose carefully. The ease which guests are connected to properties through online advertising portals offering and advertising properties and completing the cash transaction all at the click of a button have led many investors to enter this space.

However, many homeowners letting their properties face a myriad of hidden problems, from lower than expected rental rates, intermittent guest numbers, disputes with councils and neighbours, inescapable contracts with property managers and letting agents, aswell as high maintenance and cleaning costs. It has been stated that you should never confuse a holiday with an investment and we are all potentially guilty of this when we visit a destination,  have a great time and think how wonderful  it would be to own a second home in the vicinity. It is wise to come at decisions regarding owning a second home, particularly if taking out a holiday to let mortgage, from a non-emotional, calculating and logical perspective.

Before considering buying a property at your favourite holiday spot, holiday home buyers should investigate vital statistics, occupancy rates and rental returns and this can be easily done by consulting tourism boards and local estate agents. The location and accessibility of a property are also crucial. Its proximity to a railway station, motorway or airport may effect the consistency of booking numbers. There’s little point, for example in buying a beautiful, secluded country cottage if guests are not prepared to travel more than two to three hours.

Returns on holiday lettings may be good, but there are a range of additional costs which need to be factored in such as expenses for cleaning, advertising, booking fees, maintenance and necessary insurances.

Owners also have to balance the ever increasing high cost demands of guests who seek the luxury of fine furnishings, satellite TV/broadband, modern kitchens, multiple bathrooms and games facilities.

It is important to enter into a holiday let with eyes wide open and whilst a location can be attractive, it can also become a costly enterprise if your homework is not undertaken.

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