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Original poster

Buying a holiday let before a flat in London

20 replies

Justst · 26/03/2022 08:15

DH and I both work long hours in high paying professional jobs. We are late 20s, and obviously looking to get on the property ladder.

We are not sure if we will stay in London forever. We may go overseas or we may move out somewhere else, with remote working.

My parents live in a very popular south coast (seaside). They run two airbnbs for retirement income, and own a flat elsewhere in the country too.

We are considering spending say 500k on a holiday cottage/flat. This would be an investment for the long term. If things went pear shaped we would love to move there.

My mum would be very happy to clean/rent it out for us, and we’d give her a cut.

Has anyone done a similar thing?

OP posts:
Twiglets1 · 26/03/2022 08:17

The idea seems a strange one to me. Wouldn’t you be better buying a flat in London so you can stop paying astronomical rent? Also, flats in London are likely to be a better financial investment in the long run.

DomusAurea · 26/03/2022 08:25

Pay a consultant to give you sound advice as you are in high paying professional jobs may be an idea?

Original poster
Justst · 26/03/2022 11:23

You’d think wouldn’t you. But in the area of London that we live/would want to live, the cost of owning a property vs rent paid means that we would get a smaller property for the same amount of money. Plus, we don’t know if we want to live in London long term- so don’t want to be encumbered with the prospect of needing to hold on to it for the long term.

At least in the seaside town, we know that we would want to live there at some point in the future.

OP posts:
BestZebbie · 26/03/2022 12:09
  1. You could also rent out a flat in London if you moved away, but would be saving right away.
  2. If you moved out of London in your early 30s might that be because you wanted to raise children near family/in a less urban area? Would a holiday flat actually be the sort of property you'd want to do that in?
TatianaBis · 26/03/2022 15:02

London is always going to be a better investment. London prices always rise higher and faster than the rest of the country.

If you own a London flat you can always sell it and buy on the south coast if you decide to move there.

Dindundundundeeer · 26/03/2022 21:16

You’ll struggle to buy a rental if you don’t own a principle residence. You won’t get a loan easily.

Original poster
Justst · 26/03/2022 22:51

Who said anything about a mortgage?

OP posts:
friendlycat · 26/03/2022 22:54

I would buy in London first and work the future out from there. It gives you better investment and more future options.

The South Coast is fine if you want to live there but buying a property for a holiday let there in your circumstances doesn’t make financial sense.

Firstly London rental prices, taxation on a holiday let, then if you buy your own place to live the second home situation in terms of financials, capital gains tax etc.

Buying a holiday let comes after you are established in the property market as an added bonus if you can afford it, not at the expense of owning somewhere you can live in.

HotChoc10 · 27/03/2022 05:52

If you have £500k in cash I would just get a mortgage for the house/area I wanted to live in now

Wallywobbles · 27/03/2022 06:02

Honestly holiday let's are a pain to own. I've another 3 years mortgage in mine. It never quite covers it's costs and covid was a very expensive year for us.

Theredjellybean · 27/03/2022 07:50

I would buy the house at the coast.
If you can buy it without a mortgage, rent it out with help from parents, use rental income to either help with London rent or put into pension or other investments.
Its not true that London prices always rise further and faster, currently many popular areas are out performing London.
But this sounds like your thinking more emotionally than just hard investment.
If your plan is at some point you'll have a family and want to live near your parents then buy the house you want to live in eventually now.
It would be a wonderful security to know when the time comes fir a move out of lo, maybe part time working, maybe less income etc you'll be mort free in a house you chose to give you and your family a wonderful lifestyle at the coast near grandparents for your dc.

Theredjellybean · 27/03/2022 07:54

My dd and her dp are doing this.. They know longer term when they have dc they don't want to stay in London. So they are looking to buy near us in Cornwall.
It's slightly different as we have a London flat as well, so if they needed to be there for work they would still have a London base.
Though we have 4dds between us and I think they all think our London flat will be there London base.... 🤣 It's small and it's not their personal hotel!

1990s · 27/03/2022 07:59

I’d be thinking about this as a practical decision not an emotional one.

And as someone who is a “high earner” who “doesn’t need a mortgage” (drip feed) I’d be consulting a financial advisor.

Saltyquiche · 27/03/2022 08:02

I’d consider doing similar as long as I could buy something I really loved by the seaside. Such destinations in the south coast gain value

If you’re likely to be in London more then a couple of years it might make financial sense to buy in London however?

ukborn · 27/03/2022 08:07

If you have as much as £500k cash I'd still buy the London place with a smaller and better value mortgage. It will increase in value so when u do decide where to eventually live you will make money, and you will be saving the rent.

UnexpectedItemInShaggingArea · 27/03/2022 08:20

Places like Cornwall will soon use new devolved powers to tax the shit out of holiday lets. If you are thinking of investment then property is not as lucrative as it used to be. Buying a house that you are going to live in will always be the best first step.

Stevenage689 · 27/03/2022 08:30

@Justst

Who said anything about a mortgage?
Obviously it's a fair assumption that you were planning to get a mortgage, given you didn't mention otherwise in your OP.

Either option is viable, though you'd get a better return from a 500k flat in London (especially as you've said that rents are so high). Or even you could take out a small mortgage and get a larger flat in London. Either way, you could then rent out easily, hiring a management agent to manage the property.

If it were me, I would look in both locations. I shouldn't want to miss an ideal property for the future, but equally I might find an excellent flat in the current area.

Franklin12 · 27/03/2022 08:38

So bringing up children in London is not the big bad wolf and Cornwall is the ultimate destination. I was a brought up in London, I have relatives in Cornwall and it’s dare I say it a backwater. You might think bracing walks on the beach and cliff strolls will be wonderful but it’s dead for teens. I know we are talking about years and years but if you are looking at 500k cash you might well be thinking of private education and I can tell you the schools aren’t a patch on the South East and London.

Also, kids brought up in London are street wise, they can look after themselves. My niece who lives in Cornwall would be completely lost managing in London.

Sorry Cornwall - I have visited relatives numerous times but it’s not all that.

TatianaBis · 27/03/2022 13:18

It’s not true that London prices always rise further and faster, currently many popular areas are out performing London

Currently being the operative word - due to Covid. But Covid patterns won’t last forever and London prices are more reliable.

Twiglets1 · 27/03/2022 14:08

Yes I agree with the above. London is a safer investment than a Cornish property that won’t seem as inviting when more people have to return to the office

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