Buy-to-Let Holiday Home Investment
What is a Holiday Buy-to-Let?
A buy-to-let holiday home is a property rented out as a holiday home but owned as an investment by a buy-to-let property investor. In comparison to, for example, a residential buy-to-let, holiday rental property investment is concentrated around properties that are used as holiday homes, as opposed to residential homes.
Usually purpose-built or renovated, holiday home buy-to-let properties are increasing in popularity around the UK as more people take their holidays in the UK rather than going abroad. It’s a booming asset class and popular destinations such as Wales, the Isle of Wight, Scotland and Yorkshire are seeing increasing numbers of properties available for investment.
Depending on the property itself, prices can vary, but rental yields are extremely strong in comparison to other types of investment and overall the returns are strong indeed for holiday buy-to-lets. These types of property are often bought in a similar capacity to residential buy-to-lets, however, many are now looking into the market as a way to diversify their property portfolios.
Should I Consider a Holiday Home Investment?
For many existing property investors, holiday home investment is becoming an increasingly attractive option for them in comparison to other types of investment. Depending on the property itself, many go for around the same price as a typical residential property, however, the yields tend to be stronger and the rental income earned is higher, due to demand, in comparison to residential.
The UK is also a popular tourist destination, attracting millions of visitors each year, ensuring a steady demand for holiday accommodation. This consistent demand can lead to a reliable rental income stream and a potentially high occupancy rate. The UK’s strong legal framework and stable property market also provide a secure investment environment.
The potential price rises over time is also attractive. Owning a holiday home also allows you to enjoy a personal holiday while generating rental income during other periods. With careful research and management, a UK holiday home buy-to-let investment can offer both financial returns and personal enjoyment.
- £257 billion
- UK tourism is predicted to be worth £257bn to the economy by 2025 (VisitBritain)
- 39.5 million
- Visit Britain are forecasting 39.5 million visits in the UK in 2024 (VisitBritain)
- £34.1 billion
- UK tourism spend is forecast to reach £34.1 billion in 2024 (VisitBritain)
- 97%+
- UK holiday visists are forecast to increase by 97% in 2024 compared to 2019 levels (VisitBritain)
How to Buy a Holiday Let:
There are a number of ways to look at investing in a buy-to-let holiday home in the UK. Firstly, you can go directly to the private market to see if there are any re-sellers looking to sell their investment. The upside of this is that you may be able to negotiate on the price but it can be time-consuming and there are no guarantees in terms of income or occupancy.
You can then also look at developers and direct sales agents who can provide advice, guidance and more time to talk you through any potential investment. The price is fixed, however, there are often assurances on income or yields, and they are in recognised areas where it’s recognised that there is a good occupancy rate and they’re purpose-built just for this purpose.
Finally, there’s always the option to buy residential property and refurbish it for a holiday rental, however, the price difference is almost non-existent in most cases and will require more upfront for the investment unless you look to purchase a property that needs a lot of work, but this isn’t advisable for first-time investors.
Holiday Buy to Let Mortgages Overview
We’re often approached about using buy-to-let mortgages to fund investments for a holiday home, and the short answer is that it is extremely difficult to attain a holiday buy-to-let mortgage.
Although both buy-to-let properties and holiday homes generate rental income, their operations are distinct. Landlords and holiday let owners have different responsibilities. Holiday homes are often offered as serviced accommodations, similar to hotels, and are usually rented out furnished.
The income generated from a buy-to-let property differs from that of a holiday let. Holiday lets tend to have higher rental prices and charge per day instead of per month. This allows holiday-let owners to potentially earn more rental income compared to buy-to-let properties.
However, the occupancy rate for a holiday let is typically lower than that of a buy-to-let property. This can balance out the differences in income. Lenders are well aware of these distinctions and offer separate mortgage options for buy-to-let properties and holiday homes.
Frequently Asked Questions:
Is buying a holiday home a good investment?
It certainly can be if you do your research, approach somebody professional and knowledgeable, and stick within your budget. The return and demand for UK holiday home investment is very good. If you’re wondering whether it’s for you, why not browse through the investments we have available?
Can you make money from holiday homes?
In short, yes you can. The rental income from holiday homes is very good indeed and many make around 10% yield per year. Whilst the ability for capital appreciation isn’t quite the same as residential, if the property is well kept then this is definitely a possibility too.
How much do I need to buy a holiday let?
That very much depends on where and what you’re looking to invest in. If you’re wondering what our investments are available for then you can see them here. Typically, for a holiday rental that provides a reliable and solid income, we’d recommend you’d need somewhere in the region between £100K and £300K.
Buy-to-Let Holiday Homes for Sale
Invest in buy-to-let holiday homes with UK property investment specialists.
