The pandemic has led to many more individuals now relying on staycations and we have certainly received more enquiries about whether now is a good to invest in a holiday let or not. With lockdown restrictions in place, owners of existing holiday let properties, like the wider tourism industry, faced great challenges in being able to let their properties out and what, for many, was previously considered a low-risk property investment became a drain on their finances.
Now that the lockdown restrictions are lifting however, there is a more positive outlook for UK holiday lets, in part driven by a continuing demand for holiday options at home from a country which traditionally loved to jet off to Spain, Italy, France or further afield.
The market is certainly recovering from the first lockdown restrictions of 2020 where limitations on people’s movements meant that many were forced to cancel their travel plans. People were advised not to complete on new house purchases, physical valuations were not possible and many lenders pulled their holiday let options for mortgages.
Fast forward to current day and the recovery has been substantial. The number of holiday let mortgages has grown significantly. The easing of lockdown, the vaccination programme and the restrictions on international travel has meant more people are booking staycations in the UK. This increase in demand has driven up both rental income but also property prices for relevant properties in suitable ‘holiday’ areas.
“Sykes Cottages report high levels of demand for the summer months, with July and August bookings up 126% on last year.”
Sykes Cottages*
The question many people are asking though is whether this is a temporary situation or whether this will last. If the demand for UK Holiday Let accommodation continues then now could be the time for landlords and individuals to seize the chance to invest in the holiday let market. The average price for holiday let purchases is increasing and data from Sykes Cottages shows that holiday let investments offer an average income of £21,000 a year.
“If you have tried to book a getaway for you and your family this Summer, its likely you will have seen that options are limited with demand being up and the cost of holiday accommodation having increased from previous years. This situation is likely to continue for the foreseeable future therefore for the property investor, a holiday let property can potentially offer profitable return while an increase in the number of holiday let options could also help provide families and individuals looking for options for their holiday or short-term break.”
Chris Lees, Co-Founder of Resolve Financial Solutions.
A note of caution though. As the rest of the world becomes more available to the UK public then over time, they could revert to pre-pandemic holidaying habits which could then reduce the demand for UK Holiday lets down to pre-pandemic levels. The current high demand should therefore not be thought of as 100% permanent. Additionally, the responsibility and involvement required to run a Holiday Let (regular cleaning and change-over stayers) compared with a more traditional Buy to Let which is let out on a 6- or 12-month tenancy should not be under-estimated. While the latter potentially offers a lower rental yield than a Holiday Let, it can offer a more reliable income for the investor so individual priorities should also be established.
If you need help or advice in this area of purchasing a holiday let then please get in touch. We can find you dedicated holiday let products and can support you through the holiday let mortgage application process.
Please note: Buy to let mortgages are not regulated by The Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on your mortgage or other debts secured on it.
*Reference: https://www.sykescottages.co.uk/blog/sykes-summer-staycations-boom/