The market for UK holiday lets is booming so, if you own additional properties to your home you may well be tempted to go into the holiday lettings business. Or, perhaps you are looking to buy a property for holiday letting.
As hospitality finance experts, we receive many enquires and have helped a significant number of people to start holiday lettings businesses. Based on our experience, we have come up with a few key things you should consider:
- Is the property in a good location? Are you going for a rural retreat cottage offering or a seaside or city location?
- How will you furnish the property and have you set a budget aside for this? It has become a very competitive market in recent years and those renting holiday cottages are becoming more discerning so it is best to equip and furnish your cottage to the highest standards.
- Can you make broadband available? Again this is increasingly the expectation these days.
- Are you going to allow pets or not? Many people specifically choose a self-catering holiday in the UK so that they can take the dogs too. To maximise your market it is best to allow pets and some people charge extra and/or a deposit to cover increased cleaning and potential damage.
- Are you in a position to invest time in gaining accreditations from local tourist boards, green organisations (if applicable) and encouraging online reviews like Trip Advisor?
- Who is going to do the cleaning? Hygiene and cleanliness are all important.
- Similarly, who would be the emergency contact for guests?
- How much are you going to charge? The best way to decide where to pitch your pricing is to look at similar-sized properties in your area and use that as a guide.
- Are you aware of the safety rules and regulations covering upholstered furniture and gas and electrical appliances?
- Have you factored in insurance? Holiday lettings owners will need public liability insurance as well as building and contents insurance. There are specialist policies available for self-catering properties and insurance brokers can be a real help here.
- Do your business plans factor in the fact that tax will be due on profits from holiday lettings and that Council tax for your holiday cottage only applies if it’s just your second home and not rented out commercially. If you make it available for holiday lets for 20 weeks (140 days) or more, then it should be registered for business rates rather than council tax. Small business rate relief and Furnished Holiday Letting (FHL) tax relief may be applicable.
- Who is going to the market your property for holiday rental? Are you set up to respond quickly to enquiries and bookings and take deposits and payments? Or, are you going to employ an agent to do that for you?
Do you need hospitality finance to build your holiday lettings business?
If you need a mortgage for a holiday letting property, you will need a commercial mortgage and our team at Stewart Hindley are in the ideal position to advise you.
If a lender realises that you are trading on a residential mortgage they can call in the loan due to breach of covenant. Trading on a residential mortgage can have serious consequences. You could be forced to re-mortgage and in some cases, if your trade income is not enough to cover the amount of debt involved, this may not be possible. The worst case scenario may be that you lose your home.
We strongly recommend that you don’t wait until it’s too late. Contact us now for friendly and professional advice based on many years of experience in the hospitality finance sector.