The idea of a holiday home in the UK never seems to lose its appeal. But in the past 18 months, they’ve become more popular than ever — and for good reason.
Staycations have exploded thanks to Covid, with tourism organization VisitBritain anticipating more than 50 percent more domestic holidays this year than in 2020.
The use of a holiday home not only as a personal shelter, but also as a nice extra income has become extremely popular.
Warm property: a thatched cottage in West Lulworth, Dorset
In June, there were 10,290 active Airbnb listings in Cornwall alone, as people flipped their properties to make extra money through so-called short-term rentals.
So if you want to join the vacation rental craze, here are seven golden rules to follow.
1. Lock a location
Maybe you have your favorite locations: after all, you are staying in the new home, but you are also renting it out.
But if you want to follow government statistics for 2021, the most popular holiday destinations in the UK this summer were the South West – ahead of 24 per cent – with North West England, Scotland, Yorkshire and East Anglia next.
Or if you’re looking to rent out your property for a short period of time, interior design company Crafted Beds calculated the average fees Airbnb hosts charge in different cities, which are more popular than rural locations for a two- or three-night break.
Top comes Newcastle with an average of £122 a night, followed by Leeds, York and Exeter, all around £120.
2. Size matters
Your budget can dictate this, but if you can, look at the likely visitor market for your area.
If the location is off the beaten track and quiet, a small property is suitable for romantic weekend bookings or longer periods for walkers.
If you’re looking for a beachfront holiday home, this is likely to attract families and groups of friends, so a larger property is the order of the day.
3. Find the financing
Independent financing service Moneyfacts says only 74 holiday mortgages were available in August 2020; now there are 186. However, there are many options.
‘A holiday mortgage is intended for people who borrow against a house that is rented out on a weekly or shorter basis, such as Airbnb.
‘It differs from a mortgage for a long-term rental.
“And a holiday home mortgage is different because it’s for the owner’s personal use,” said Mark Harris, director of mortgage broker SPF Private Clients.
4. Good references
James Greenwood, of Stacks Property Search, says: ‘Open plan works well for vacation rentals, but separate use space is worth a lot. Storage allows the owner to keep their own belongings while renting out. Parking is a strong selling point.’
His Stacks colleague Clare Coode — who lives in Cornwall — adds: ‘Think about your online appearance: Instagrammable property always helps.
‘Location-relevant fixtures such as navy colors and panel walls in seaside locations are good.’
As beautiful as the house is, you should equip it well; quality furnishings and accessories that can handle rugged wear and tear (and pets if you allow them) add to the bill.
Schofields Insurance, a holiday rental specialist, is proposing £15,000 to upgrade the interior of a two-bedroom cottage.
5. Hire a real estate agent
Chances are your vacation home is some distance from your main residence, so it’s hard to be on the spot for every change of tenant.
Agents charge 20 to 25 percent of the booking fee. It sounds like a lot, but it includes cleaning, laundry and key collection.
In addition, the agent will advertise, answer questions, take bookings and handle emergencies.
And agent fees are tax deductible.
6. Take over tax
The rules suggest that the most efficient home is a furnished vacation rental, rented out to a single customer for no more than 31 consecutive days.
In addition, the furnished vacation rental must also be available to the public for a minimum of 210 days of the tax year and be rented to paying customers for a minimum of 105 days.
7. Add insurance
It’s boring, but essential. Even if you’ve rented out your vacation home for a few weeks, most insurers won’t cover Airbnb-style short-term rentals.
It is therefore possible that you need separate coverage. GoCompare is the first service of its kind to ask insurance applicants if they want to accommodate short-let renters and if so, will they have to pay for additional coverage.