Looking at buying a holiday let

[Ellebel]

Hi, I live in London and have recently inherited some money, enough to buy a second property outside of London. I am considering a few places but Folkestone and Rye are both high on the list. The idea is we would use it lots as a family and also Airbnb it. I need it to bring in a decent income to be worthwhile.

Wondering if anyone on here does similar and has advice? I would need it to be managed by someone more local rather than myself. Not sure how hard and expensive it is finding companies/ a person to do that is?

I know laws are constantly changing around Airbnb so also not sure if it’s too big of a risk. Also know lots of coastal towns are fed up of people like me coming in and buying holiday lets so not sure if the neighbours would all just hate me and my family every time we did come and stay!

Any advice much appreciated.

Before you do, go and check the recent changes to holiday let taxes and regulations that came in this year.

I know a lot of lets have come on the market here this year so something is up.

not sure if the neighbours would all just hate me and my family every time we did come and stay!

Yes they would. Second homes should be banned.

Depends on the house really.

Yes, there's a lot of animosity towards people who buy "normal/family" homes in, say, housing estates, or in residential flat blocks, to use as holiday rentals mainly because they're distorting the market for locals who can't afford/find their own homes to buy or rent (plus the annoyance factor of having holiday guests as neighbours).

But, there are lots of homes that literally couldn't be occupied as homes, i.e park homes, farm/barn conversions, boats & train carriages, "quirky" flats, etc., which are a lot more tolerable as the locals couldn't live in them anyway, either due to planning regulations, general unsuitability or inconvenient locations.

The market has passed IMO. Don't do it OP.

It's become more and more unattractive in recent years so I would check the numbers first.

Labour have shot that market to pieces
Max fund your pensions

Join some forums, there are lots eg on Facebook.

As a summary - currently they are not a good investment. If you are needing a good return look elsewhere. The market is saturated and competition is fierce. In particular during ‘Covid’ a huge amount of holiday let’s opened up. There is space for good holiday let’s BUT they are hard work. There are a lot of regulations to comply with (look up ‘the pink book’ by PASC -you can read a copy for free online). If you are a remote owner looking for others to manage it your income will be eaten up by advertising fees, managing agents fees (and remeber they all add VAT), cleaning fees, maintenance etc including cleaning, Landry, garden maintenance, usual bills etc. speak to some agents, get an idea for possible letting income and costs if they’re managing it for you, and do a full budget. Assume you won’t hit their revenue/ get proof from them that it’s accurate.

in addition if you’re using it yourself, and you use any ‘peak’ weeks, such as Christmas/ NY, summer hols, easter hols and half terms - you’ll be taking away time when the property is likely to be let at a premium.

They are also taxed differently to how they were in the past, so make sure you understand this.

Many people are selling up

we have a holiday let (v unpopular on MN I know). I live near, locals are not opposed to it as we aren’t in a touristy area and there aren’t many near by, it is managed by me, cleaned by locals and brings income in locally to businesses. So I’ve been lucky to have support.

it’s still a poor investment return wise, and if we weren’t thinking of retiring into it in the future we would probably sell.

Where I live, second home owners are treated in a polite and friendly way as individuals but they are ruining the town and nobody wants them here now. A small number would be fine, but that's not how it works.

Quite surprised to get more than a few emails from my normal poncy holiday rental go-tos - landmark trust type, offering black Friday discounts.
Interestingly and conveniently I've had no trouble finding really good city/town let's at short notice so that suggests the markets saturated.

Locally we don't update second home owners after big storms. You need to drive down or pay someone.

This. It’s almost always immoral. You have two houses. Someone local has none. All so you can have a nice holiday.

It’s pretty dreadful really.

Totally agree with this.

Most airbnb we use are outbuildings, conversions, sheds, lofts etc etc, they're not properties that someone could live in

Would you be able to put an annex on your main home OP, I would be interested in a holiday let but only if it was next door to me or round the corner, you would pay a lot of money for someone else to manage it.

I looked into doing this when my mum died and I decided a property on the south coast was a bad bet as so many LAs are charging double council tax for second homes now. Quite rightly. When I looked into it more closely I realised that it’s an immoral thing to do in the middle of a housing crisis. You could do a long-term let and become a landlady but even that is not very easy now.

Are they selling?

Those are much better for the town. Hotels and caravans are fine too. It's a large proportion of ordinary homes being used as holiday places that means schools and GP surgeries and much else being underused and therefore underfunded, so they end up closing. Second homes which are empty most of the year are worse than AirBnB in terms of services not being used and housing being in short supply, but AirBnBs that are used a lot tend to be noisy and holiday makers careless about parking and dealing with rubbish properly, which is hard on their immediate neighbours.

People have been doing it for years, the "housing crisis" is just a meme to keep people taking out mortgage debt on over-priced boxes, the drop in sales for new-builds though shows people will only believe the nonsense so far.

Agree with all the PPs. At best you'll make around a 5% yield. You can make more than that by putting it in a savings account or investing and you won't have to spend all day stressing about your airbnb rating, wondering if your second home neighbours hate you and having to field phone calls at all hours about wifi passwords/parking/key safes. Also away to Rye or Folkestone a few times a year would be mind numbingly boring.

Thank you everyone for your replies. Really interesting and a lot to think about. Definitely seems like this isn’t the best thing for me to do with my inheritance, on either a financial or moral level. Will do a lot more research. Does anyone have any experience of buying land and building shepherds hut or similar? Seems like an absolute minefield. Perhaps the most straight forward thing to do would just be to invest with a financial planner.

Why do you want land and shepherds huts, is there money in that? Why not steer clear of property and look at the stock market instead, do you have some knowledge of that?

I know someone who did this. Years of hard work for almost no return.

Hospitality is BRUTAL.

Rye is dead as a doornail out outside of school hols and Bank Hols. So I guess very few people take holiday lets at quiet times. Hardly any of the properties in the Citadel are owner occupied - all second homes or holiday lets. And very few 'quaint; properties in the centre have parking.

Sorry to pour cold water on this but friends and family. You mean freeloaders!
Air BnB fees, costs, taxes and capital gains tax etc...you would need a fleet of lets to make an income. It's a terrible idea.
You d be better off upgrading your lived in house to a bigger, better, nicer area, and putting something into ISA and pension. And no forgetting kids house deposits fund.

You'd need planning permission for this, which you almost certainly wouldn't get.

Just buy a house and let it to tenants who can make a home there on a long term basis. Much safer and ethically sound.

Hi OP,
We built a shepherd's hut on land we already owned. We had to get planning permission for it, which took a while and cost money as we are in an AONB. It will cost a minimum of £30k for a high spec one; we did a fair bit of the work ourselves. We are in a good location near a beautiful village and a vineyard. Weekends are busy and we charge around £250 for 2 nights. But out of that has to come electricity, cleaning costs, website running costs, we provide biscuits and juice etc. So let's say profit is £175 per weekend. We do get some bookings during the week in the summer but during the autumn and winter it's quiet during the week. So it would take years for you to start turning a profit. As many PPs have said, it is much less profitable than lots of people think, and is definitely not passive income.