Property experts warn buyers of holiday let ‘barriers’ despite UK staycation boost
Simon Calder offers advice on booking staycations for 2021
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Property experts Rob Bence and Rob Dix from The Property Hub discussed on The Property Podcast whether Britons should invest in holiday lets. In an episode from September 15, 2020, the property experts were asked whether getting into holiday lets is a “good idea” in the current climate. The coronavirus pandemic has seen more Britons ditch their summer holidays abroad for a staycation closer to home.
Rob and Rob were asked by Brad, a former university student who studied real estate.
Brad had been helping his parents start on their property investment journey after they bought a home in Norfolk last year.
The family are now looking at investing in something else – possibly a holiday let – and wanted to know whether it’s worth sticking with a buy-to-let.
With there being such an increase in staycations, is now a good time to buy a holiday let?
The experts said a lot of people “were thinking about holiday lets at the moment for pretty obvious reasons”.
They continued: “It seems highly likely that domestic, UK-based holidays will get a boost for the next couple of years so there are lots of people who have liked the idea of holiday lets – they always seem to be quite popular.
“The current situation is pushing a lot of people to think about it more seriously.”
However, the property experts warned there are potential “barriers” when it comes to holiday lets, with mortgages being, historically, the main one.
They said you do need to use a specific buy-to-let mortgage which have “always been in short supply”.
“Lenders haven’t tended to favour them,” they added.
But the experts said recently more options for holiday lets have become more available.
The lenders offering these mortgages have tripled over the last year or so, according to the experts.
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There isn’t the same choice compared to a regular buy-to-let but it has become more competitive which means that rates will come down.
They continued: “There are lots of things you need to be aware of when it comes to holiday lets.
“It is more work, it isn’t the same steady income that you get from a buy-to-let and if you go to property hub.net and use the search box and search for holiday lets, you will find episodes we’ve done in the past where we go into some of that detail.
“As for whether you should do it now, I’d say in general, it’s a tricky one.
“Domestic holidays are likely to get a boost for the next couple of years.
“Maybe for longer than that. But no one really knows how long that’s going to continue for.
“So if you are making an investment for the next 10 to 20 years, what’s happening today isn’t necessarily going to apply for the whole of that time.
“But what I find encouraging about your particular property is that you originally bought it to be a buy-to-let.
“So you know it’s going to work as a regular buy-to-let.
“I’ll be more nervous about a holiday let that can only really work for that purpose and you don’t have a plan B.
“In your case you could have a go at using it as a holiday let and if it doesn’t work out or if it starts working out and then stops, you can always switch it back to a buy-to-let and make perhaps less money but have a steadier and easier time of it.”
The experts also said it’s not going to be “that straightforward” to switch a holiday let back.
Homeowners may have to change mortgage products which means you really need to think about your options before you commit.
However, the experts said it’s good to have multiple options in the property market and that there is “relatively little downside” to giving holiday lets a go.
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