Investing in a Holiday Home – Key Considerations fo...

Investing in property for many people – whether for personal use or as a pure investment opportunity – can be an excellent option. With scrolls of pages online that will tell upcoming investors why property in general is a worthwhile investment to make, the process and decisions to be made can feel daunting. But what it boils down to is – how can that dream, or goal be turned into a reality, and which opportunity will create the necessary return.

Creating a Passive Income

Investing in a property can be a fantastic source of passive income, offering consistent cash flow for many years to come. What’s more, you do not need to be an expert or have a special skill set to take advantage of this exciting and rewarding venture.

The world of holiday lets, particularly in the UK present a great investment opportunity. The value of domestic holidays taken by British residents is forecasted to grow by almost 100% by 2025, from c.£8bn in 2020 to c.£16bn in 20251. Add to this the fact in the UK, property prices typically consistently rise, save for the occasional blip along the way, and the opportunity looks even brighter. In Cornwall for example, average price increased by 17% for the 12-month period to August 2021, compared with 12% across the UK2.

When buying property for holiday letting purposes, look for properties with guaranteed return on investment. At Stephens + Stephens, for example, we offer a minimum 10% gross yield guarantee to buyers investing in holiday homes in Cornwall over a five-year period, irrespective of the performance of the asset or market fluctuations. We genuinely believe that the demand for holidays in Cornwall – both from domestic visitors and those from further afield – shows no sign of slowing down which is why we are confident in the potential for significant earnings.

Do Your Research

Having a base-level of knowledge around location, style, and how to finance the investment is all you need to start the journey of holiday property investments.

In the UK, we are blessed with some incredible holiday destinations – sandy beaches, rugged and unadulterated landscapes, mountains to explore, and so much more. One location which has a long and fruitful history of welcoming tourists, and where holiday makers continue to flock to year upon year in their masses, is Cornwall.

Cited as one of the UK’s top five earning regions for property owners, Cornwall offers holiday makers stunning scenery, a unique microclimate, surf culture and top-quality gastro options. It is easy to see why Cornwall has been voted the best location in the UK (and third best in the world) to provide a return on investment from holiday home letting. Picking a popular location such as Cornwall, where

properties are often booked far in advance, will often give a solid indication of how your property will perform. A ‘bargain property’ is probably a bargain for a reason.

Target audience should also be a key consideration when looking at both location and house style. Are you looking to attract families looking for a budget break, or a more discerning customer who wants an ultra-luxe staycation. And of course, if planning on using the property as a personal holiday home as well – what do you want in your holiday home. An apartment overlooking the sea, or a house tucked away in a quiet and hidden corner surrounded by countryside. In Cornwall, there really is an option for every occasion.

Other considerations which are beneficial to keep in mind include – is the property easy to reach by car or train, and how will this impact your target holiday maker? And, what are the local amenities they will most want?

Practical Considerations

Make sure you know how it will change your tax. For furnished holiday lets, owners can claim capital allowances which mean the cost of furnishing your property to a luxury standard – and in term increasing your potential rental income – can be deducted from pre-tax profits. An option which is not available to long-term rental properties
Buy to maximise rental income – while property is often seen as a decision made by the heart, when looking to invest, let your head lead instead
As with any property purchase, ensure the relevant checks and surveys are completed
Ensure a fast internet connection is available, especially if it is rural. WiFi is one of the most requested features and could be the deciding factor when guests are debating one property over another
When budgeting for your investment, make sure you consider all the costs involved. From the actual property purchase to stamp duty, insurance, furnishing – you do not want to suddenly find you must pay for a cost you were not aware of

The Extra Touches

The finishing touches are down to the owner, but considerations to include are: décor should be carefully considered – with beautifully styled properties having the edge needed to stand out in a busy market.

For those investing in a property not too close to home, having a trusted and experienced letting agent on hand is necessary for peace of mind. Sunrise + Sunset, for example, reflects everything which is so distinctively Stephens + Stephens and look after some of Cornwall’s finest holiday properties.

*Helen Stephens is creative director at Stephens + Stephens