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Holiday lettings set to benefit from ongoing Brexit uncertainty

A Brexit-inspired holiday letting boom is expected to hit the South West this year, according to local holiday letting agency Bournecoast.

The agency predicts there will be a considerable uplift in the number of people staying put and letting homes in coastal hotspots such as Bournemouth, Christchurch and Poole this year, in large part thanks to the ongoing delays to Brexit and the uncertainty this is causing.

Bournecoast Holiday Agents believe that the current impasse surrounding Brexit is likely to result in more UK residents opting for staycations for their annual holiday. If they do opt for that approach, they are also likely to holiday in their local area, the agency said.

The weakness of the pound, the rising cost of flying internationally, the potential impact of Brexit on travel and the predicted heatwaves in the UK this summer are all factors encouraging more and more people to have UK ‘staycations’.

This is a further boost to the rapidly expanding holiday lettings industry, which has been given a shot in the arm by the number of changes in buy-to-let regulations and tax liabilities in recent years, with many landlords opting for holiday letting over traditional long-term residential tenancies.

The reduction of mortgage interest relief, the extra 3% second home stamp duty surcharge and stricter affordability checks for mortgages all mean long-term residential letting investments are not always as profitable as they once were. As a result, Bournecoast said that many property investors are exploring the additional income and other opportunities that come with being a holiday letting landlord.

Furnished holidays lets (or FHLs) provide a number of advantages over traditional letting. In particular, HMRC views the revenue from these properties as earned income rather than non-earned income if their criteria are complied with. This means the property must be available for commercial holiday letting for at least 210 days a year and let for at least 105 days.

Those FHL properties which meet all the relevant HMRC criteria are exempt from the mortgage tax relief changes (set to be fully implemented by the end of the 2020/21 tax year), while relevant earnings can be placed into a pension, allowing landlords to benefit from tax relief via this avenue.

In addition, landlords of FHL properties can claim capital allowances rather than the wear and tear allowance long-term letting landlords receive, while capital gains tax relief can also be on offer when a property is sold.

“We are seeing an increase in the number of landlords enquiring about the advantages of holiday letting and we are more than happy to spend time with investors to talk through all the options with them,” Des Simmons, Bournecoast’s Managing Director, said.

“Property investment is a very serious business, with a number of choices available to unlock the true value of a property. The best investors we deal with are those who explore all the options available to maximise their income, and realise that with the help of property experts the best option can change over time for the same property.”

Bournemouth, Christchurch and Poole are now bracketed as one combined resort, but each has its own unique appeal to tourists. It’s a popular part of the world for day-trippers, visitors and holidaymakers alike and, as a result, is seen as a prime destination for holiday letting.

Bournemouth, the best known of these coastal towns, recently saw its beach voted the best in the UK, 5th best in Europe and 14th best in the world (according to TripAdvisor), while it was also described as a ‘model of reinvention’ in a recent House of Lords report.

The phenomenal growth of self-catering holiday letting sites such as Airbnb, TripAdvisor, Holiday Letting, Owners Direct and HomeAway have also helped to make the process of booking accommodation easier than ever for UK residents and international visitors alike.

“We are often asked how we compete with the big international holiday letting websites and we simply answer that if you can’t beat them you join them!” Simmons added. “The majority of the properties listed with Bournecoast are now also advertised on all the main portal sites, like Airbnb, as well.”

In 2020 Bournecoast will celebrate its 60th anniversary and has been family run since its inception, when it was founded by Major and June Webb in 1960.

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