Buying a holiday cottage to let out

[Shazafied]

Hi all,

We have around £30k in savings and a lot of equity in our home, low mortgage. We are thinking of buying a holiday cottage to let out (99%) but may use ourselves if there is a vacancy.

We live on the outskirts of a AONB popular with coast to coast walkers/ cyclists and are looking at buying a very small cottage with garden / views . We have renovated property before and are happy to do cosmetic work in this case (but would rather not do full renovations this time). I have seen properties listed for 100-130k that look similar to what we’d liked and so require cosmetic work to be let-able. This is a medium term idea - thinking of buying next year, would like to save a few more thousand if possible first.

I’ve not managed a holiday let before (although have done air bnb in my own home before DC) so just looking for any advice / pitfalls / am I being mad....

I’m contacting our mortgage broker with a list of questions soon to sound out types of mortgage available, and trying to get an idea of fees and other costs (over and above working on/furnishing the property) - it’s a very embryonic idea atm and just trying sound out if it’s actually possible.

We’d be looking for something within 45 min drive from our home so I plan on doing the changeovers and bookings myself (would like to use Airbnb as am familiar with it).

There is probably a bunch of stuff I’ve forgotten to say here... but yes, am I mad ? Do any of you manage the property yourself ? Could I manage the tax stuff myself (we do self assessment for my husbands business but guessing there is loads to consider with letting property and an accountant might be better)?

Really grateful for any pointers, thanks

I’m afraid you must clean it thoroughly at change over.

I think your idea might depend on location. Many people use the agency for everything where we are. We do not get the cheque until after the season though! Annually. Lots of people use their own homes where we are for the summer holidays. We let out as much as possible and even when we let out to a tv company from March to end July we won’t get full booking for any month other than August. We reduce the price greatly for Sept and most of October but are not fully booked. We keep the heating on over the winter. I wouldn’t want to have a big mortgage and have to rely on rental holiday income.

You either need to live close enough to deal with emergencies or employ an agent to manage it on your behalf.

Also consider that some MPs are campaigning to double council tax/ rates etc for holiday lets and second homes in some areas like the Lake District due to locals being priced out.

If you're making it available for a certain number of days and actually let it out for certain percentage of that, then you can come off council tax and go onto business rates. With only one property, you'll almost certainly qualify for 100% rate relief. However, you'll have to pay for a commercial refuse and recycling collection (it's about £16 a month with my council for standard wheelie bins fortnightly, but councils vary) and if you're in Scotland, your water will go onto business rates as well rather than being collected with the council tax (mine's about £30 a month for a 3-bed house on a private septic tank).

Don't underestimate how much it costs to set up a house from scratch. A smallish 3-bed cottage done to 4* standard will cost about £15k once you factor in furniture, TV/electricals, crockery, cutlery, kitchen equipment, bedding and three sets of bed linen and towels (one in use, one in the wash, one ready to go on at the next changeover). I send bed linen to the local laundry and do the towels myself, but my laundry bill is still £150-£200 a month.

Just don't.

You will pricing people out of their local markets - your income is likely to be higher than part time / seasonal which is characteristic of most rural areas in the UK. You will be able to offer much more than someone who lives in the are - just because the capitalisation of your rental income is much higher than the mortgage multiplier.
You will be making people homeless - people are unable to live near their employment so they lose their jobs.

Local infrastructure fails - buses, doctors surgeries, libraries and schools all require a critical mass. If you take a house out of the equation it can be the tipping point that removes the services for the whole village.

You will be contributing to pressures in rural areas and building on greenfield land - second home ownership contributes more to the housing crisis than any other factor.

Try investing in something that is not so damaging to people. Manufacturing or retail space could do with some investment - why not explore opportunities there.

If you can live with killing off villages - go right ahead. You won't be thanked by the people who have to live with the consequences.