These days, many proprietors opt to buy a furnished holiday let over a traditional buy to let. The trend started when the UK government heavily taxed the latter, so proprietors began moving into the tourism sector to maximise their profit. It was an excellent move to make.
After all, what is better than a owning a seaside home that you and your family can use ad-hoc, and let out at other times to recoup running costs and generate an income? However, the government caught onto this shift in the market and changed the tax laws so staying within them and guidelines is of utmost importance. In this article, we look at what to know and other factors to help you decide if a furnished holiday home is for you.
Under HMRC (Her Majesty’s Revenue and Customs) guidelines, furnished holiday lets (FHL) have their own set of tax guidelines that count as a trade, and not a residential home or commercial premises. The criteria whether a property is counted as a holiday let is as follows.
The other criteria is that it must be furnished to such a standard that allows a full tenant normal everyday use. The good news is that all furnishings, including electrical appliances, can be deducted against your tax payments, and you won’t have to pay council tax because you will instead register for business rates.
Other tax incentives include the ability to claim relief as a trader. This taps into various reliefs like loans, gifts of business assets, advertising costs, utility expenses, insurance, agency letting fees, maintenance costs and cleaning fees. All these reliefs are not year-round, only when paying tenants are renting the property. It is worth noting that for tax, and capital relief, your property does not gain FHL status but is instead monitored for 12 months.
Marketing is essential, and not an area where you can skip corners. Some owners use an agency that complete the marketing, and manage bookings for a set fee and or commission. They promise to maximise your occupancy rates and rental yields. Other owners sign up to Air BNB. If you choose the latter, know that Air BNB take no responsibility for handling any aspect of your property. They are just a place to market it.
They also have strict rules, regarding items like weapons, what classes as a dangerous animal, and the use of security cameras on your property. It is worth checking out their standards to ensure you keep within their guidelines to maximise your chances of excellent reviews because many potential renters pay attention to them. Rental guarantees are another option. These holiday cottages for sale in Yorkshire, Filey offer 7% rental guarantee upon approval of the application.
When choosing to buy a holiday let, location is everything. Some markets are saturated with them; hence your chances of occupancy are lower. Local councils in other destinations have planned tourism marketing campaigns, which will help and aid your promotion to the public. Within the UK, specific destinations stand out as time honoured favourites.
Cornwall: Sitting in the Southwest of the UK, Cornwall has long been a favourite of British holidaymakers. Called the Cornish Riviera, it offers miles of sandy beaches and lots of stunning inland scenery. Places like Newquay make a roaring trade for surfers, while other small quaint villages and towns like Fowey, and Falmouth draw in tourists with their traditional outlooks and values. Let’s not forget the local food, of which all tourists love to tuck into. Read more about Cornwall and its staycation market.
Isle of Wight: Think vintage beach huts to understand what the isle of wight is all about and where there are gorgeous beaches, people flock from all over the UK. Sitting 1.2 miles off the south coast, beaches like Ventnor and Shanklin have won many awards. Other activities include historical sites, walking, trekking and summer sports so any renter will never have an excuse to be bored. More about owning a holiday let in the Isle of Wight.
Yorkshire: This vast country attracts people from all occupations, including history buffs, and lovers of the great outdoors. The Yorkshire Moors is a major attraction, but the staycation theme is taking off in the area, with more British holidaymakers choosing to stay in the UK for the near future rather than head abroad.
Sitting in Cornwall, this development of two, three- and four-bedroom barn-style lodges, are for sale fully-furnished. The development concept is the enjoyment of the great outdoors; hence there is a range of on-site facilities to enjoy including water sports and spa treatments, an indoor pool, a health club, children’s club and playground, a bar, restaurants, and paddleboarding. Priced from £225,000, the first year’s site pitches are included, and all come with a 999-year leasehold. See the full property listings here, and contact us if you want to arrange a viewing or find out more about information about buying a furnished holiday let.
Also read: Why the UK Holiday Let Market is Booming.