Holiday Let Investment

Make your holiday let investment a second source of income

Contact us today and find out how to grow your sources of income by making an investment in a holiday let property. We will provide you with advice on where to invest and help increase the amount of income you make from your holiday home.

Why invest in a holiday let?

The second home market has evolved over the last decade as owners have become more aware of the income earning potential of their properties. In fact, recent research released by Savills on the second home market indicates that most buyers now plan to acquire with the intent to rent out the property from the offset. 

The proliferation of smart phones and growth of the sharing economy now means an increasing number of people are comfortable booking a rental property rather than a hotel room. Not only that, but short-term rental properties also provide many advantages over hotels including lower cost and more flexibility, particularly for large families. 

At a time when tax changes to mortgage rate relief in the UK have made the buy-to-let market less attractive the holiday let market continues to grow and benefit from the increasing number of people holidaying in the United Kingdom.

What is a furnished holiday let?

To qualify as a furnished holiday let, your property must be available to book for at least 210 days of the year, needs to be let at least half of this time (i.e. 105) days and no booking must be for more than 31 days. The property must also be fully furnished with everything required for use for holiday accommodation.

What are the advantages of a furnished holiday let?

Income

Generally speaking, holiday letting will provide you with a much higher level of income than a long term let. You will have to factor in additional costs such as utilities, cleaning and maintenance of the property however in order to ensure you cover your mortgage costs. That said holiday let properties are generally fairly cash generative as the majority of your income is paid ahead of the date of travel and most of the costs are incurred during the stay.

Tax*

There are numerous tax advantages to running a holiday let as the UK Government treats furnished holiday lets as a trade similar to running your own business. These benefits include:

  1. Capital allowances: you can claim capital allowances on any fixtures, fittings and furniture acquired when you first bought the property. These allowances can reduce your taxable income in the early years of your investment.
  1. Pension contributions: the income you make from your holiday let can also be eligible for tax benefits for pension contributions.
  1. Capital gains tax: when you sell your property you will be eligible for a number of reliefs from capital gains tax including Entrepreneurs’ Relief, Rollover Relief and Holdover Relief.   
  1. Small business rates relief: if your property qualifies as a furnished holiday let you will need to register it for business rates rather than council tax. Most holiday lets will be classed as a small business and benefit from 100% business rates relief meaning neither business rates nor council tax are payable,

*we recommend to all our owners that they seek independent advice from an accountant regarding their tax affairs. Feel free to get in touch if you would like a recommendation.

What about renting out my own home?

Renting out your own home on a short-term let can provide a valuable second source of income and can often pay enough for you to go on holiday yourself. For most, their home is their most valuable and beloved possession.

At Luxury Cottages we’re experts in marketing your luxury home to an affluent demographic of design-loving guests. We take care of all the booking enquiries, so that you don’t have to, and ensure guests are properly vetted. We also have a dedicated Guest Services team to deal with any questions and a 24-hour support line in case of any emergencies. 

Sustainable Travel

We’re committed to ensuring that your guests travel is as sustainable as possible. Click here to find out more and see how you can help.