The advice website says any Brits considering investing in a holiday home must look at both the benefits and the potential drawbacks of such a purchase, as well as being honest with themselves about the primary purpose of the investment.
“When buying a property abroad, it’s easy to get caught up in the potential commercial value of your holiday home, even if you initially made the purchase for personal use,” James Andrews, personal finance expert at money.co.uk, commented.
“Many buyers are sucked in by the attraction of purchasing a low-value property with a high potential rental value, but that doesn’t mean it’s going to make you profit in the long run.”
He added: “Thanks to a combination of management fees, fluctuations in the exchange rate and random repair and upkeep, there’s no guarantee that your rental income will cover the mortgage payments, even if you have a regular supply of tenants.”
He argues that, if people do decide to buy property abroad, they need to ask themselves if they’re doing it primarily for their own use or for commercial gain.
“Both could work out well for you, but if you plan to make serious money renting your property out, you need to do the job properly – it’s not something you can take a half-hearted approach to,” Andrews advised.
“Running a successful rental property can be a full-time job, and if you’re trying to do it remotely at the same time as full-time work at home, you’re going to run into trouble. You can, of course, decide to go with a management company to handle the day-to-day issues, but this will ultimately add to the cost of running the holiday home, further reducing your profit.”
How can you add value to your Airbnb?
Returning to domestic investment, and the expected staycation boom this summer, Harvey Water Softeners has compiled a report which highlights the adaptations that Airbnb investors need to add the most value to their properties. And the good news is, the firm says, not all of them involve digging deep into your pockets.
With limits on foreign travel likely to mean staycations dominate the travel landscape once again this year, Harvey Water Softeners argues that many Airbnb hosts will naturally be eager to maximise the potential earnings from their holiday let.
Although some may have the luxury of being able to completely transform their property, many – the firm says - will be relying on making more subtle alterations to attract prospective guests.
To help hosts hit the ground running as summer approaches, the company analysed what was likely to add the most value to an Airbnb.
Guests were, unsurprisingly perhaps, found to be most willing to splash on holiday lets with swimming pools and hot tubs included. Despite this, it was air conditioning which was revealed to be the feature which added the most value to a property, with hosts who are capable of keeping their guests cool able to charge up to £68 extra per night. By comparison, a swimming pool was found to add £63, a hot tub £46 and a gym only £39.
Many Airbnb hosts won’t, of course, be able to afford the ‘dizzying costs’ of installing a hot tub or state-of-the-art gym, so where can the most value for money be had?
According to the research, top of the shopping list should be a high chair – which, despite representing a fairly modest investment compared to a swimming pool or hot tub, would see guests willing to pay up to £28 extra per night for one.
Another popular request – although more likely in the winter than the summer months – are indoor fireplaces, which can help to drive up the price of a rental property by £23.
The little things count, too, with the research showing that simple additions such as offering shampoo and hangers should also not be forgotten as they can add good value to your holiday let too.
The commonly requested features which add the most value to an Airbnb are as follows:
Air conditioning - £68 per night
Swimming pool - £63 per night
Hot tub - £46 per night
Gym - £39 per night
High chair - £28 per night
Indoor fireplace - £23 per night
Dryer - £18 per night
Shampoo - £5 per night
Hangers - £3 per night
Grace Jackson-Wylde, an Airbnb super host who has been welcoming guests to her two holiday cottages in Northumberland for three years, believes simple touches can go a long way to ensuring guests have a great stay.
“It is likely guests have been looking forward to their stay for weeks or months so first impressions are massively important,” she said.
“Set their holiday off to a great start from the moment they walk through the door with a stress-free check in and a sparklingly clean property! Having a welcome note along with a complimentary bottle of wine or fizz is also a great way to impress guests on their arrival.”
Her three top tips are:
Provide a welcome guide with information on the property and local area.
Let guests know you’re on hand to answer any questions but don’t pester them.
When decorating don’t skimp on the interiors, soft furnishings and mod cons but if you wouldn’t have it in your own home, then don’t put it in your holiday let.
You can find additional advice from Grace here.
Survey reveals short-let sector is confident about quick recovery
In another boost to the staycation market, the results of a survey conducted amongst the UK Short Term Accommodation Association (STAA) members indicate that, although this year will continue to be a challenging one, they are overall confident that the sector will recover.
The latest edition of the tracking study, carried out in March, found that over 60% of companies felt that their business would bounce back quickly after the April 12 reopening. Furthermore, the survey showed that there was a 69% average confidence rating about the outlook of the sector for the remainder of 2021, rising to 84% for 2022.
The key findings of the study were:
Optimism about the future of UK staycations
Virtually all member companies believe that UK staycations will perform strongly again this year. According to members’ experiences, around half of the UK staycationers that they hosted spent more than in previous years.
The most important issues for UK staycation guests reported by member companies were:
Cleaning standards in the accommodation
Having socially distanced check-ins
Ability to social distance during their stay
Ability to receive home deliveries of groceries and takeaways
Member companies were optimistic about the future, saying that they are positive that the sector will now be a more mainstream choice of accommodation for tourists and that there is likely to be an increased demand once the recovery is under way, due to changing customer preferences.
February 2021 business levels predominantly down
All companies were operating at less than 50% occupancy in February 2021. When compared to February 2020, pretty much all companies said February 2021’s business was down.
Profitability and cashflow negatively impacted by restrictions
Whilst UK staycations went some way to providing relief to short-term accommodation providers last year, three in four said that did not fully compensate their business for the absence of international travellers.
Around three-quarters of member companies have concerns that the most recent lockdown will have a negative impact on their business, with the biggest being: it will hit profits (either they won’t be profitable at all this year or be considerably less profitable) and it is going to severely damage cashflow. What’s more, a sizeable number of companies had to make redundancies as a direct result of Covid-19.
Merilee Karr, chair of the STAA and chief executive of UnderTheDoormat, said: “Our members are delighted to be back in business since the April 12 reopening and are on the whole optimistic about the prospects for our industry. With widespread international travel still expected to be limited for the foreseeable future, our members are focusing on the UK staycation market.”
She added: “Their experiences from last year have provided them with great encouragement that short-term rentals will become even more of a mainstream choice for people wanting to take a short break or holiday. Customer preferences for self-contained accommodation, where they are reassured by the high level of cleaning standards, can practice social distancing effectively and are likely to spend more than in previous years, means that our members should be able to recover some, if not all, of their lost revenue from 2020.”
However, she insisted that ‘we are not out of the woods yet’, arguing that companies took such a hit last year that they still need government support from things like the furlough scheme, access to grants and the maintenance of the reduced VAT rate.
“As our survey shows, companies’ profitability was a major victim of the pandemic with many having to make redundancies. At the STAA, we will continue to support our members and promote short term rentals as an attractive and responsible holiday option,” she concluded.