Buying a Holiday Home

Buying and investing in a holiday home

There seems to be no let up in the trend for buying a holiday home. Whether it is exclusively for one’s own use or an income-generating letting prospect, Britons are snapping up second properties at home and abroad.

Latest estimates are that there are more than 500,000 holiday homes in Britain alone and countless more British-owned ones overseas. The majority of these are let out at least part of the time and in one of the favourite home-buying regions East Anglia – 1.2 per cent are second homes.

Holiday homes span the range of choice through town houses, country cottages, coastal apartments and park homes.

Park homes are a different animal from the bricks-and-mortar holiday homes as they can range from mobile homes through timber lodges to substantial luxury properties. Locations are as diverse as Kent, west Wales, the Yorkshire Dales, Spain, France and Portugal.

Park home prices are as varied, too, with mobile homes on the continent as low as £11,000 while lodges and luxury park homes can command £60,000 to £95,000 in exceptional locations.

As with buying your principle home, buying a second requires the same set of rules and care.

The buying process

• Determine your budget and your needs

• Make a checklist of what you are looking for and arrange viewings

• When your offer is accepted, it is time for surveys

• The legal stage comes with the conveyancing – deposit paid, the exchange of contracts and the legal transfer upon completion

Buying a property to let is not about sitting back, taking the extra income while an asset increases in value. Without the right planning the prospect of a good investment could become a financial disaster.

You must be able to cover mortgage repayments and insure the property if no money is coming in from rent. Also to be considered is what would be the consequences of a housing market slump.

While it would be nice to have a property close to a major tourism area such as the Cornish coast, the Lake District or the Yorkshire Dales, not everyone can have a property right on the doorstep of such popular spots. The nearer you are the higher the price your prospective property commands.

While location is important, the property has to be kept up to a standard that will attract tenants. The cost of maintenance has to be borne and when buying you need a contingency fund for repairs.

Desirable properties to let are the ones near public transport, convenient shops for essentials, restaurants and bars and with parking facilities nearby.

There are increasing numbers of banks and financial institutions with loans and mortgages tailored specifically for the buy-to-let market. These mortgages – also referred to as Residential Investment Loans – can be up to 15-80% of the purchase price; are about 0.5 % higher than normal, standard variable rate mortgages; and are available in long, short, fixed and capped options. A professional financial advisor should be consulted.

Five rules for holiday home letting

• Choose a good location

• Two and three bedroom properties are better for families and groups of friends

• Keep the property well-maintained and attractive

• Look at hiring a letting agent. Management fees can range from 15-30%

• Keep the property fully insured

Location, location, location

Britons have been buying holiday properties for decades now and there are little pockets of Britain along the costas of Spain, the “petits villages’ of France and on the Algarve coast of Portugal. They have travelled 3,000 miles to buy a in stake Florida and to the east as far as Turkey and Cyprus and the former Communist Bloc countries of Croatia, Romania and Bulgaria.

In the UK one of the keys to not only buying a second home as an investment but also making it generate a good income is being in reasonable driving distance of a tourism area and these could include:

• The West Country – Cornwall, Devon, Dorset and Somerset have a wealth of beaches; watersports and moors for the active and history by the cider barrel load

• East Anglia – the wildlife of the coast of north Norfolk, pretty Suffolk villages, old style seaside resorts and loads of history

• Wales – long sandy beaches and scenic islands attract thousands to the coastline while the valleys and the beauty of Snowdonia, pull visitors inland

• North-West England – compare the diversities of the noisy fun of Blackpool with the beauty of the lakes, mountains and green hills of the Lake District National Park

• North-East England – an often-rugged North Sea coast is punctuated with excellent beaches and resorts such as Bridlington and Scarborough. Inland the beauty of the Dales just keeps visitors pouring in

• Scotland – the western isles, the green Highlands with Ben Nevis and the rugged north and east coasts are just a small part of the Scottish experience

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