What is the reality of owning a holiday home?

[pongyprude]

We are thinking of buying a holiday home. Nothing extravagant. It’s a four bedroom unit with a small pool. We would try and rent it out to cover some of our costs but otherwise we would let my parents stay there as they also love the area.

Everyone who we know who owns a holiday home says it’s a millstone. Costs more than you think and then you feel stuck having to visit. Prices in the area we are looking seem really reasonable so may be scope for growth.

Our careers aren’t there yet for us to wfh for weeks on end, but in a few years this is likely. What is the reality like of owning a holiday home?

If you let it you will have to have someone manage it and do changeovers, and pay tax on the income. You will also have to not keep anything personal there - unless you have a cupboard you can lock things away but then you have to do that each time. And it’s likely the most lucrative weeks are exactly when you want to use it, so weigh that up.
If not letting it out then be sure to have good security.

How far away from home ? Is it in another country?

We loved ours, but it wasn’t really a “holiday home” as such, in that it was within reasonably easy (a few hours) travelling distance and wfh mean we spent at least 3 nights a week there. We never rented it out but we did often loan it to friends and family so we all enjoyed it.
It was a luxury because obviously you are paying a whole other house utilities and rates so it’s not cheap. People also hate you for simply owning it.
We have recently moved our main home, so we’ve also sold our holiday home, because it’s too far away, but I don’t regret it for a minute. We had a lot of really good times there.

We had one when we lived overseas, essentially so we had a base when visiting UK in summer/ at Christmas. We rented it out the rest of the time- usually a longer let over winter through an insurance company (for when people's own homes have been flooded/ burned down) and then weekly from Easter to Oct half term. We did turn a profit (enough to extend and improve the property) so financially it was worth it. Firstly, yes if you're doing weekly lets you need to have someone to manage it, do the changeovers and manage any issues that arise during stays because if someone is only there for a week, things need to be fixed immediately, even if that costs a lot in stress and money. Also if it's being rented out you need to depersonalise it and keep it that way. We had the garage locked for our own stuff like kids bikes and body boards etc. but we used the same bedding/ towels/ kitchenware as the guests and had no personal effects lying around- essentially when we were there we were just non-paying normal guests. You also have to keep a bit of emotional distance as you do have the odd guest who trashes it or is just not very respectful and so thinking of it as your home just makes it worse. If you're renting it out, be really practical in terms of furnishings- don't create your dream home at huge expense and then spend the next 10 years being lightly bitter about the wear and tear to it.

We are 20 years in to owning our holiday home and still love it . We don’t rent it out but are on a holiday exchange website so eg when we go to Oz next year we will have free accommodation

So many factors. We bought one last year in the UK just under 3 hours from us. We get up here about every 6 weeks or so. It’s a purpose built holiday “village” so there are facilities there which encourages bookings. The managing agent takes 25% but it still more than covers costs. Realistically if it wasn’t so easy to get to (ie just jump in the car and drive for a few hours) we would use it half as much and then what’s the point.
our main reasons were it’s an area we love and still so much we haven’t seen and done within an hour or so of it. It’s a 5 min walk to the beach which is brilliant. Our son is autistic so likes familiarity so coming back to the same cottage each time but also able to have his bedding he has at home etc kept up here so we don’t have to bring so much with us. We also have a dog and in hotter weather if we were away we could take him out with us because it was too hot so he can go to the beach for a good walk in the morning whilst we go out for a few hours.
we’ve just done a full refurb on it so this is the first time in nearly a year where we’ve had a proper holiday without having to do lots of odd jobs.

I love the "nothing extravagant" followed by 4 bedrooms + Pool description!. 😊

I think it's a very personal thing and depends on what you want from it. My DP had a 35 sq. m apartment (would fit in OP's bathroom ha ha) one street back from Promenade des Anglais in Nice as an investment. It was permanently let to airline staff based in Nice airport. That worked ok for a few years, then between the taxes (in both countries UK and France) on the rental income, Taxe Fonciere, Gestion fees (management fee), Letting agents fee, he was making a loss. The taxes were reduced to the loss making, but those bloody returns still had to be filed. Try that in France! He engaged someone to do it for him, more expense. Anyway...

It was sold and went within a month. He did make a profit on the sale, but there were notaire fees, selling agents fees, cleaning fee, capital gains tax and lots more bits and pieces. We got to stay there for a bit when getting it ready for sale.

I'm glad he sold it and didn't keep it as a holiday pad. I prefer to pick a new place for every break/holiday and would hate to be confined to the one place all the time. Realistically unless you are retired and have an EU passport it's not worth it within the EU. That's my take on it.

We’ve had our holiday home in the sun for 15 years. We’ve had some absolutely amazing times there. We don’t rent it out as don’t need the money & don’t want the hassle, It’s bliss having a home from home but it’s quite costly . We spend a fair bit funding family members’ free holidays and we are ready to visit other places now so will probably sell in the next few years . Absolutely no regrets

If you're going to rent it out, make sure you're doing it through an agent.
There would be nothing more frustrating than staying somewhere and the boiler breaking or the beds not made etc they'll have the contacts to summon a 24hr plumber or an array of cleaners if your regular one is sick.
This also to a certain extent means buying somewhere popular so the agencies exist...

We have a 2 bed apartment in Costa blanca. Get out there 5-6 times a year and family and friends use it. We do not rent it out as it’s a hassle and I feel like people won’t look after it. We pay a monthly charge for maintenance including a communal pool. Have to pay utilities and taxes, all in it’s about ‘£200 per month to have it (no mortgage) We love it, we have it so nice and know the people around us. When we retire we will spend more time there so look forward to that!

We have had - and sold - 2 holiday homes, one abroad one in UK. NB we have sold them. Millstone doesn’t come close- can you afford to furnish and equip another home, pay all utilities and council tax (or equivalent)service charges and income tax out of your income without compromise? Can you afford to pay for managing letting? How will you manage maintenance issues? Do you really want to holiday in the same place every year (you will feel obliged to do this).

Honestly if you have the money to do this just spend it staying in other peoples houses or lovely hotels in places of your choice for the rest of your days. You will sleep better at night I can assure you.

We have one. Planning to retire there. We rent it as holiday accommodation to cover some of the costs and mortgage. We still have to put money towards it. We got someone who manages it. We don’t go all the time as we like visit other places, have family overseas and have limited holidays. We also like variety so may be bored to go to the same place all the time.

I guess it depends where. In some parts of Wales (Gwynedd and Anglesey) the council tax is 2 and a half for Gwynedd , and 2 times the normal for Anglesey for a second home.
To get the business rates instead you have to rent it out for a minimum of 182 days.

For above comment

We have a second home which at the moment we use at weekends and for longer periods in the school holidays. I think you need to distinguish between two things-

1. pros and cons of owning a second home
2. pros and cons of running a holiday let

You also need to think which this will be, primarily, as you will want to make different choices depending on that.

For us, we have never considered letting so have been able to make all the choices we want- there are lots of things about our house that make it unsuitable as a holiday let (unfenced pond, narrow 16th C spiral staircases etc) but absolutely lovely for us. We will retire here hopefully in 4 years.

Disadvantages are tax (extra stamp duty, extra council tax- totally fair IMO) and the fact that you need to run two houses- some costs will double up (eg broadband, TV licence, insurance- this can be even higher for a second home) and some will be higher than for one house (eg heating- you might not fully heat a house when you are not there but you need to keep it above a certain temperature or you'll get mould). I also find that we regularly have to make unexpected trips here eg to wait in for a plumber or take delivery of something. I also find that it's hard to run both houses totally smoothly- I'm constantly forgetting which house needs kitchen rolls etc and end up with 20 in one place and none in the other.

For a holiday let, obviously you'll be making some income and that might cover the costs of someone local to manage the house, but you may find that you dislike the compromises you need to make to balance the house seeming like a home and being suitable for paying guests. I would also find it hard to feel fully at home somewhere where strangers were regularly sleeping but that might just be me.

You also need to think about location. If it's primarily for you to use, how accessible is it? Can you realistically get there enough to justify it? If it's further away and will mainly be used by others then that's less of an issue.

Basically I think you need to be clear in your head what the main aim is- is it to have a second home for yourself (which you occasionally let) or is it to have a holiday let business (that you occasionally use) because it will make a big difference to what set up will work for you.

A pool would add a whole extra layer to maintenance / management/ running costs / liabilities for renting.

Ours isn’t a millstone but I can see that they can be. Ours is close by so we spend every weekend there so get a lot of use. We rent it out for two months summer but use a very good agency so we don’t have anything to do. We pay tax on this obviously but I’ve no problem with that. It’s small so not much maintenance and cleaning and it’s a flat so lock up leave ( I think this is important not be worrying about it). We are planning to retire there so I good way to intergrate into the community beforehand.
i would be nervous of a big place with a pool and grounds and somewhere further away so not easy to check. I also don’t want to stop going on other holidays so that would be consideration also.

Currently at our place in the sun.its great. I am just trying to get residency, DH has his due to his Irish passport. I am only allowed 90/180 days.
In the past 4 years, we have Airbnb'd it. That has generated enough to have it insulated and a bathroom refurb. We were only able to do that because we had excellent vo hosts. Cleaning and maintenance ste into the profit.

We have just arrived, at our hopefully soon to be holiday home, which we are purchasing with my siblings, as can’t afford on our own. It’s going to be primarily for us, as DCs moving to near second home and it means we will have a base. It’s on a type of holiday park and can only be used 51 weeks of the year. We have all decided to let out for now, as all set up as holiday lets (it comes fully furnished) and then if DCs stay in new area then, we will buy off siblings eventually, but that incurs 2 lots of stamp duty I think. Will see in the future. We will be using a company.

Well, if it's UK you will pay double council tax until you qualify for business rates.

The most important thing is to find an excellent and reliable housekeeper. I was very lucky with mine ( now sold) The best thing is a local person who you can develop a relationship with. Ask in the local pub for recommendations!

I've seen enough people bitterly regret it and struggle to sell it that my advice would be to steer clear.

Why not just keep your money and your options open?

The world is so big, why would you want to keep going to a single place on holiday, and the taxes, maintenance, letting to strangers, insurance etc can be a real headache.

If you want to go on holiday just rent someone else's holiday home that they are probably desperate to get rid of, then come home and not have any ongoing stress or worry!

It’s already registered for business rates as a holiday let place. They are selling the whole lot, and have put us in touch with a company that will deal with the letting & housekeeping for 2 years - it suits us for now. Let’s see. I’m just slightly concerned that it doesn’t work out and we end up with an albatross, but as my brother says between us all we’d probably use it loads.

I've had a 7 bedroom holiday home in France for about 10 years now. We researched the area well before we bought it. It's 15 miles from several lovely beaches and about 1/2 a mile from start of National Forrest with green route that runs for miles for safe bike rides. The house is 1/2 a mile outside beautiful port and market town. We go once in the summer for a couple of weeks. We often go for a half term week. We let friends and family borrow it for free whenever they like. My foster sons cricket coach has borrowed it twice as he and his wife love long bike rides. The taxes are quite expensive but we think it's worth it. When we finally retire from fostering DH and I will go far more often to stay there. We like our neighbours and they keep an eye on it for us when we are not there. DH does have to spend a few days each year on maintenance like painting outside of house and weeding.

If you are hoping to stay there for extended periods while WFH, bear in mind that most employers put limits on doing this from abroad due to tax implications of staying there so long you become tax resident and immigration laws.

For instance, my employer will not allow any working at all from Spain unless you have an EU passport or a working visa, as that is technically illegal even during the allowed 90 days stay.

If I rented mine for a month in the school holiday weeks it would get enough to pay all taxes for a year.