Holiday rental property is an increasingly attractive investment opportunity, and can offer profitable returns for those wanting to start out on the investment ladder, or diversify an existing property investment portfolio.

“Staycations” – that is holidaying in your own country – have become increasingly popular over the last decade and as such, demand for UK holiday cottages remains high. More and more UK holidaymakers want to stay at home and explore our amazing island nation. And despite some difficult years for tourism in recent times, the short-term holiday rental industry has shown resilience.

In fact, the holiday rental market is bringing much-needed revenue to local businesses and generating new jobs, particularly in coastal areas that are undergoing rejuvenation.

For budding investors, holiday rental property can offer both income and capital growth, with a potential annual income triple that of a regular buy-to-let property.

The Cotswolds, Cumbria and the Lake District top the list of most profitable holiday rental locations in the UK, and a property in these areas can generate an average £28,500 in annual rental income. Other popular locations include Dorset, the Peak District, Cornwall, East Anglia, the South Coast, North Wales, and the Scottish Highlands and Islands. As a picturesque island nation, clearly our coastal areas will be the overall most popular areas for holidays and property investment.

As with any property investment, doing your due diligence and research before you make any decision is vital, and holiday rental properties have specific issues that need to be taken into account.

Firstly, holiday rental locations can experience peaks and troughs of usage, so investors should feel comfortable with irregular income, as income will depend entirely on occupancy rates throughout the year.

It is also unlikely your holiday rental property will make an instant profit, as you’ll need to take tax and regulatory issues into account, including regional licencing schemes, planning permission, local council tax premiums and also the potential removal of the furnished holiday lettings (FHL) regime that was announced by the former Conservative Chancellor.

Many holiday rental properties also require some refurbishment to make them ready for the rental market.

Therefore, doing your sums and making sure that the overall income profit potential is right for you, taking the above issues and also tax and stamp duty into account, is a key first step when considering investment, and SLR Wealth is able to assist and guide during these important first steps.

The majority of holiday rental property owners will not live close to their property, so a reliable and experienced management company that will service and market the property on their behalf is absolutely key to success, and SLR Wealth and partners are able to make recommendations for trusted management companies in popular locations across the UK. The cost of this management service also needs to be considered as part of your profit assessment.

By way of example of the potential investment return that a holiday rental offers, SLR Wealth and partners recently advised of the availability of a two-bedroom property in the historic tourist town of Haltwhistle, Northumberland – close to tourist attractions but also commutable to Newcastle.  With a very attractive purchase price of £62,000 and after some light refurbishment, this property would yield a potential income of approx. £23,000 on a 65% occupancy per annum before tax and fees, which is triple that of the single let.  Our exclusive deal also shows excellent year-on-year capital growth potential.

SLR Wealth’s conclusion is that there is most definitely a place for holiday lets and serviced holiday accommodation as part of a balanced property portfolio. SLR Wealth and its trusted partners are able to regularly source properties that are suitable for short-term lettings, and with the benefit of our exclusive recommendations, below-market value prices and trusted advice, we are perfectly placed to advise you, so if you’re interested in finding out more, contact us for a chat.

One final tip for holiday rental property investors: naming your property can add value. According to the team at MoneyWeek, house names can give your property more charm and a certain personality – for a holiday rental property, this is a must!  

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