If you’ve ever considered investing in a second property, you may have already thought about holiday lets. With the popularity of staycations on the rise, now could be a great time to look into it. Making some extra cash with the possibility of enjoying the property yourself is an attractive prospect for many. With summer just around the corner, now might be a great time to start the conversation.
A holiday let is a property that’s let out to tourists for short periods of time as accommodation. Holiday lets can command a much higher price than a standard buy to let. The property must be available to holidaymakers for a minimum of 210 days of the year. You are free to use it yourself for the remainder of the 12-month period. Shorter term lets can offer an easier role as a landlord too – you’re not responsible for maintaining a tenant’s primary home.
Holiday Let vs Buy To Let
Some recent predictions suggest that the appetite for staycations will continue to rise post-pandemic. This trend has led to investors looking to use holiday lets as an investment. At peak times, some holiday lets in popular destinations can earn as much in a week as a standard buy to let does in a month. Holiday lets can be more expensive to purchase, but the return on investment is typically more than a buy to let.
As long as your property meets the furnished holiday let criteria, holiday lets are eligible for full mortgage interest tax relief.
As they are categorised as businesses, there’s no limit on the mortgage interest that you’re able to offset against your profits. This can be a great way for taxpayers on a higher rate to reduce their income tax bill. Holiday lets are subject to business rates as opposed to council tax. There’s also a possibility you’ll be able to claim 100% relief on business rates should your property have a rateable value of less than £12,000.
Unlike a standard buy to let, landlords are able to utilise their properties for a certain period throughout the year. This creates a happy medium between a second income and a second home.
If you’d like to discuss the options available to you, contact us today.