The do’s and don’ts of beach hut investments

With Britain experiencing a staycation surge, it is unsurprising that beach huts have become increasingly hot property. Beach huts have become a seaside staple, with these brightly coloured wooden boxes outlining Britain’s beaches. Due to their increase in popularity, a beach hut could be a savvy property investment.

So, investors need to know what to look for when dipping their toes into the water of beach hut investments. As more investors will look to see how they can benefit from the beach hut boom, money.co.uk and Vicky Gunn, owner of Millie’s Beach Huts, have teamed up to create their new Beach Hut Britain report. Their study gives expert advice on the do’s and don’ts of beach hut investing.

Don't buy a beach hut that's too far away

Across the board when it comes to property investments, location is always a key factor and beach huts aren’t an exception. Investors need to think about how far the beach hut is from their own home and how much time they would be able to spend there, and also to consider how long it will take to travel to the property if any issues occur.

Investors need to think about where they would be willing to travel - for example, they might adore a particular beach but would they be willing to take a two or even three-hour drive just to get there?

There is an idea that having a beach hut on the front row of the beach is imperative for safety but these huts tend to bring with them a lack of privacy as passersby might want to have a look. Those with children or pets should consider a second or even third-row beach hut. Investors who want to catch a tan and maintain privacy should also think about huts with private verandas which are perfect for sunbathing.

Don't go overboard designing your beach hut

Investors who are renovating a beach hut so it can be rented out to tourists, need to think about making their beach hut as aesthetically appealing as possible.

Regular repainting of the beach hut’s interior and exterior will be required, and a bright colour is a good way to make a hut eye-catching. Although it is important to ensure a hut has a striking design, investors should also remember to make sure they are selecting high-quality paint which will stand up to the temperamental coastal elements.

Investors will want to make sure their beach hut has an attractive design, but they should also ensure the hut is not decorated too quirkily. Investors should find a balance between distinctive and distracting, as potential buyers might find it hard to see beyond a niche design.

Do think about the extra costs

There are usually two ways to purchase a beach hut and buyers need to understand the financial responsibilities that an owner will be liable for.

The first option is to purchase a beach hut outright and then pay an annual licence fee. The fee is usually around £200-£1000 and is paid to the landholder, and sometimes the landholder is the local authority or it can be the private landowner. This type of beach hut usually incurs an initial payable transfer fee and can range from £350 to up to £17,000.

The extra costs do not stop there. Buyers going down this route may also need to pay HM Revenue and Customs, who individually rate UK beach huts for non-domestic rates. These costs can be reduced if buyers claim Small Business Rate Relief; this tends to start at around £180.

The second option is leasing the beach hut itself. This method involves being able to style the hut internally and only being able to use it for a period of time. The owner takes on responsibility for external maintenance, and leases usually cost around £600-£1,000 a year.

Do think about significant potential financial returns

Investing in a beach hut can be very lucrative because of its exclusivity, which equates to higher demand. It is estimated that there are fewer than 20,000 beach huts in the UK so this can give investors more bargaining power.

Beach huts have always been quite expensive, but the Covid-19 pandemic has made prices rise and in some areas, the prices have almost doubled. For example, the ‘Harley’ hut which is pictured above was purchased for slightly over £10,000 four years ago. Before the pandemic, the ‘Harley’ beach hut was valued at around £22,000, and the hut was sold in mid-June for the full asking price of £48,000 after three days of being on the market.