Are holiday homes becoming the new buy-to-let?

Are holiday homes becoming the new buy-to-let?

Recent figures from the Office of National Statistics have revealed that the number of holiday lets across the UK increased by 5.5% in 2016 – 17, indicating that some investors are turning towards this asset class in pursuit of better returns. With the various government reforms impacting buy-to-let it is perhaps not surprising that some investors are now turning towards holiday lets which avoid the various punitive measures that the government has imposed.

Analysis by Garrington Property Finders, the buying agents, has shown that the average prices charged can be far higher for a holiday home than a rented property. For example, comparing a holiday home in Rutland, Leicestershire which has an annual weekly rent of £1,150 to the average rent in the area for a similar property- approximately £550 a month, Garrington calculated that the annual income from the rental property could be recouped in just 6 weeks by the holiday home.

Commenting on the findings, Jonathan Hopper from Garringtons, said: “Brexit and a weak pound have increased the appeal of holidaying in the UK. But there’s another factor at play – tax relief. Holiday homes which are let furnished may still qualify for full mortgage interest tax relief, while buy-to-let owners can now only claim half as much.”

“For many prudent property investors, that tax advantage is tipping the balance decisively in favour of holiday homes, meaning they are fast becoming the new buy-to-let.”