On a beautiful sunny Spring morning, it's the perfect time to start thinking of Summer holidays!
What comes to mind when you think of the British seaside? Candy floss, crazy golf and ballroom dancing? Cream teas, milkshakes, and fish and chips? Sandcastles, buckets and spades, and paddling? Not to mention the miles of beautiful and unspoiled coast of this island nation - from sweeping sandy beaches to craggy cliffs. Wherever you are in England, you are never more than 73 miles from the sea! It's ingrained in our genetic make-up and culture!
The British seaside is a fairly recent invention. The classic chalet-and-pier towns grew up during the 19th century, when it finally occurred to someone that it might be nice to let workers in industrial towns go on holiday. Their late flowering was in the 1950s and 60s, before the advent of cheap travel abroad. In recent times, it's true to say that some of their grandeur has faded. But it could be that the current economic down-turn is just what is needed to breathe new life back into our coastal resorts.
In December 2007, we saw what was happening in the property market and wider economic climate, and we decided to diversify our portfolio to hedge and spread risk. We started researching a U.K. holiday let that had the potential to achieve year round occupancy. After much due diligence, and a weekend stay in the area, we purchased our first holiday let property "SeaBreeze" at Camber Sands, East Sussex in April 2008. With a buy-to-let property you have pure investment potential. However, imagine having the added benefits thrown into the equation of being able to buy your retirement home now, at today's prices, and have it funded by someone else as well as having your own holiday home at a very low personal cost and with generous tax advantages too (if your property is furnished). A high occupancy holiday let also produces significant net cash flow, makes perfect sense in the current economic climate, and enjoys many financial and other benefits that traditional buy-to-lets don't.
Here are our Top Ten reasons to invest in holiday lets this year:
1. Renaissance in the great British seaside holiday, led by magazines like "Coast" and TV programmes like "A Place By The Sea" and BBC's "Coast". There is a significant regeneration of traditional seaside towns going on around the U.K. The seaside resort of Blackpool is set to undergo a £220m transformation with new hotels, shops and restaurants planned. Meanwhile the "Sea Change" government-backed initiative led by CABE (the Commission for Architecture and the Built Environment) aims to regenerate seafront resorts across the country through a range of cultural, heritage and public space projects, with the aim of boosting local tourism and contributing to wider economic development. Dover and Torbay are two of the towns set to receive £4m grants. The fire-ravaged Grand Pier pavilion in Weston-super-Mare is set to be replaced with a futuristic £30 million development that will open in Summer 2010.
2. The credit crunch is forcing families to holiday at home. Research from the Confederation of Passenger Transport (CPT) has revealed that twice as many Britons are planning to spend their holidays in the UK this year compared with last as a result of the economic downturn. The price-comparison website, travelsupermarket.com, also reports a 50 per cent increase in inquiries about UK self-catering holidays, and the property-finding agency, County Homesearch says that rentals for holiday cottages have jumped by 30 per cent this January, compared with 12 months ago.
3. The strength of the Euro and U.S. dollar, plus increased costs of flights and airport taxes, makes a holiday abroad approx. significantly more expensive. By the same token, it also makes a holiday in the U.K. a very attractive proposition for tourists!
4. A new report by Halifax has revealed that Coastal areas are proving to be the most popular destinations for internal migration across England and Wales. According to the Bank, the attraction of living by the sea is proven by the fact that of the 20 local authorities (LAs) seeing the biggest increases in net internal migration between 1997 and 2007, 80 per cent are coastal areas. This suggests that whilst city living still proves popular, many only stay for a limited number of years. Birmingham recorded both the highest internal inflow (315,600) of people and the highest outflow of people (403,600) between 1997 and 2007. The rise in people who are office nomads, self-employed, free-lancers, consultants, web workers, just knowledge workers in general, has led to changes in the ways people work. The nature of their work means they can work from wherever they want and coastal living has many lifestyle benefits. (N.B. We believe that properties that offer space are going to be a big commodity in the future, as many people will be working from home and will want a home office. This again is why houses are always preferable to flats).
5. Pontins recently announced a £50m regeneration programme for their holiday sites across the U.K. They will also be creating 2000 new jobs. With the credit crunch biting, it's compelling information to know that Pontins believe in investing in U.K. holidays. With investment comes growth, so up-graded Pontins sites will contribute to the local micro economy and bring increased traffic to the area.
6. Coastal properties benefit from "coastal appreciation". According to the Halifax, the average property price in 24 seaside towns was at least 20% higher than the county average last year, and these towns are expected to remain largely unaffected by the credit crunch. The Halifax study also found that over the longer term there were 18 coastal towns that saw increases in price of over 100% between 2002 and 2007. This is because buyers of seaside properties in the UK tend to be older and wealthier than others so do not need to borrow large amounts of money to fund the purchase. The net inward migration and increasing popularity of coastal towns will also support house price stability.
7. There are some attractive tax benefits to owning a U.K. holiday let.
With UK holiday lettings, you can realise a tax advantage if you make a
loss on your earnings from the property, and when you sell the property:
If you make a loss
Any loss can be offset against your other income, not just the property
income, reducing your overall tax bill. Or you can carry the loss
forward and offset it against future letting profits.
When you sell the property
You may be able to take advantage of Capital Gains Tax (CGT) reliefs,
such as 'business asset roll-over relief'. For example, if you reinvest
within three years in another UK holiday letting property or certain
other assets costing the same as or more than you got for the property
you have sold, you may be able to defer payment of CGT until you
dispose of those new assets.
You may also pay less CGT when you sell a property you have used for UK
holiday letting, compared with other residential let property. This is
because a UK holiday letting property is treated as a business asset
for the purposes of 'taper relief', so the more favourable rates of
'business-asset taper relief' may apply to any capital gain you make on
the sale.
The amount by which the gain is reduced by taper relief will depend on
how long you have owned the property and how long you have used it for
qualifying holiday letting.
To understand the rules fully, and find out about other reliefs you may qualify for, ask your professional adviser or Tax Office about CGT reliefs on the sale of UK holiday lettings property.
8. In a recent survey, 52% of holiday makers said that the number one priority for their choice of holiday was to be close to a beach. If you have a coastal holiday let, close to a beach, you can be assured of well above average occupancy in the coming years*. However, also check for problems of flooding and coastal erosion before purchasing a beach-side property.
9. There are lifestyle benefits to owning a holiday let. These can be considerable, as the feeling of knowing you have a home away from home to visit when you please is a very comforting emotion to have. If you enjoy your home comforts even when on holiday, owning a second home is a very positive lifestyle option and can increase your enjoyment of regular holidays when you take them. You can take a break when you like, and no need to plan! Not only that, but you can open your second home up to family and friends if they need it and for many it becomes a regular occasion to have large social gatherings there. Even having a holiday home as a weekend getaway can be fun as you can switch off completely from your working week and enjoy the relaxation of knowing you're having fun and making some money through rental cash-flow when the property is "working". Many people have cash in the bank that is not earning them any interest. A holiday let property purchase can give them a return on their money, an investment, and add a new dimension to their lifestyle!
10. The advent of social media makes marketing to a global market easier than ever before. We use Twitter, Facebook, ecademy, and related forums to create visibility and awareness of our property in the market place - and it works. High quality holiday lets benefit from repeat business and referrals, so you only need to get a couple of seasons under your belt, and then marketing engine will start to run itself!
- We are pleased to report that our holiday let, SeaBreeze, is almost fully booked for the month of April which is considered a hard month to fill. We also have 6 weeks booked in the summer already!.
- Please visit click here for an interesting discussion on holiday lets and how to get the most out of them.
- Please visit the tax man for the details of the tax benefits of owning a holiday let. click here
- Please have a look at Nick's video on achieving year round occupancy for holiday lets.
