If you are looking for a second home, not only for fun but also as an investment, then letting it out as a holiday home may be something you wish to consider. There are several tax advantages to owning a holiday home that you are renting out and these tax incentives may make the proposition of owning a second home financially viable for you. Holiday accommodation not only offers the opportunity of ‘holidays on tap’, it is also another way of getting someone else to pay the mortgage for you, whilst the property appreciates in value. There are also capital gains tax advantages to owning a property designated as a holiday home (see Chapter 6).

What Is A Holiday Let?

The 1996 Housing Act definition of a holiday let is ‘a let to a person or group of people, where the purpose of the occupation is that of a holiday’. Any person over the age of 16 who pays to sleep in your property must be registered with you. This means supplying you with their full name (and passport details if applicable) and a forwarding address. If you use a professional holiday letting company they will do this for you.

Location

As with all property, the location of your holiday home will be an important consideration from a rental point of view. If you want to own a holiday home, then it is likely you will want it to be in an area that has some tourist appeal, otherwise presumably, you would not want to holiday there! Where you choose to invest in your holiday home will obviously be a personal choice, which may be governed by several non-commercial factors such as being close to family, friends, etc. If you choose to invest in a second home purely for personal use, it would be prudent to remember that some day you may want to sell the property.

Remote Areas

If the area you want to buy in is totally remote and a considerable distance from any attractions, it may not have great re-sale prospects. In other words, your target market will be very small, both for rental and re-sale, so consider very carefully exactly what the primary purpose of owning a second home is for you, before you purchase. If you are serious about being a property millionaire, your primary purpose will always be the ability to maximise on the ‘property profit potential’ but that does not mean to say you can’t have fun, as long as you make informed choices.

Ideal Locations

• Near major tourist attractions.
• Beauty spots.
• Near the coast.
• Close to areas of historical interest.
• Close to areas of architectural interest.

What Type Of Holiday Accommodation Is Most Suitable For Letting?

The general preference is for cottage type accommodation which can sleep four to six. Obviously, the more your property sleeps, the wider your market will be. My own holiday cottage sleeps six and I would not advise buying anything bigger than this. Larger properties that sleep more will put a lot more wear and tear on your appliances and perhaps make accidents and breakages more likely to happen. I prefer a limited number of holiday guests, as this makes changeovers more manageable.

Using A Holiday Letting Company

It is the job of a holiday letting company to obtain clients on your behalf. If the holiday letting company is established, it will no doubt produce a colour brochure each year, advertising the properties it has registered with them. It will send these brochures out, not only to new clients but also to its existing client database.

New clients will be generated from sources such as advertising campaigns in magazines, guide-books and more importantly these days, the Internet. The website of any holiday letting company should show a full range of properties, searchable by location, size and price and should invite enquiries by e-mail. If you are thinking of using the services of one of these companies, check out their website first, to see if you like the presentation.