Are you planning a staycation this year? If so, you won’t be alone. In 2018, 66% of Brits went on holiday within the UK and 69% did so in 2019! In 2020, the projected number of people on UK-based vacations is set to rise even further.
Most ‘staycationers’ will actually make three home-holiday trips each year on average. Unsurprisingly, such high levels of interest in British holidays have led to an increased demand for holiday homes available to let. In 2019, Cottages.com, a holiday lettings business, revealed a 23% growth in properties, in comparison to the same period the previous year. Clearly, the rise in staycations offers brilliant holiday home investment opportunities.
Why has there been a rise in UK staycations?
As with most things, the rise in UK staycations can’t simply be put down to one factor. However, Brexit has certainly played a significant role. Ongoing uncertainty about the UK’s future relationship with Europe has led to many people choosing to play it safe and stay in Britain for their holidays. Subsequently, there has been an unprecedented surge in staycationers. In light of Britain’s recent exit from the European Union, this trend may be set to continue, with uncertain requirements for visas restricting free travel in Europe.
Another contributing factor has been the more favourable tax situation for holiday homes compared to traditional buy-to-let. If you successfully let your fully furnished property for a minimum of 105 days a year, and are able to demonstrate clear intention to make a profit, you can benefit from the following tax benefits:
- Ability to deduct expenses from your income tax, including mortgage interest, insurance, refurbishment, utilities and travel
- As a trader, you can claim Capital Gains Tax relief
- For the purposes of a pension, profit can constitute earnings
- Pay business rates instead of council tax, which typically works out cheaper
This is in direct contrast to residential buy-to-lets which are classified differently and so subject to the full tax rate. For many people, a move out of the private rental sector and into holiday home investment opportunities is increasingly looking attractive.
In addition, more and more mortgage brokers are now offering financial packages which have designed explicitly for holiday home investment. Through years of experience, mortgage brokers now feel increasingly confident in their understanding of rental property income that can vary widely with the seasons, in strong contrast to the more stable and long-term world of buy-to-let. Much like an experienced property finder, they know how to look at the performance of other properties in the local area.
Ultimately, British tourism is the fastest growing sector in the country, with Visit Britain predicting that it will have reached £257 billion by 2025. Such growth will necessarily bring with it excellent holiday home investment opportunities.
Where are the best holiday home investment opportunities?
According to the aforementioned research, the strongest growth in holiday let properties in the past 6 months have been in the following areas:
- South West
- East Anglia
- Lake District
Keswick in Cumbria clinched the top spot with the greatest growth in the number of new holiday lets coming onto the market. Perfectly located for exploring the Lake District – now a Unesco World Heritage Site – this gorgeous market town has a lot to offer, including thrilling outdoor activities, intriguing independent shops, quality restaurants, Theatre on the Lake and stunning scenery. It’s no surprise then that it is viewed as the perfect holiday home investment opportunity.
If you wish to investigate investment opportunities in terms of holiday homes within the UK, we are able to advise: our regional expert property advisors will be more than happy to help you!
Are you looking to investigate possible holiday home investment opportunities? Our highly experienced property finders cover many popular holiday destinations including the Lake District, North Wales, The Cotswolds, Devon and Cornwall. Contact them today by clicking here or call 0330 223 6339.