Buying a Holiday Home

Holiday Homes can be a great way to save money on paying for hotels and apartments and can allow you to have your own space even when you’re away. You can go last minute without fear of no rooms being available and keep your own home comforts there so that you can pack lightly.  It can also be a good investment. In this article, we look at all points you must consider from picking a sensible location to choosing the right conveyancer when buying a holiday home in England and Wales.

A few days or weeks of well-earned rest and relaxation in your picturesque cottage in the country or stylish apartment by the sea might be just what you need.

Location, location, location

The first thing most people consider when buying a Holiday Home is where they want to be. Some things to think about when making this decision:

• Accessibility – having a remote hideaway from the rest of the world may seem ideal for you but think about where the closest shops and restaurants are, and if this would be an issue for you.
• Travel time – you may want to get far away from your hometown for a more drastic change of scene and no risk of being called back for anything, however if you have to drive for several hours, how relaxing will your trip be? And how much use will you get out of your second home if it is too much bother to get there?!
• Parking – while a quaint, old cottage may seem idyllic, a lot of these are on narrow streets and don’t have driveways, and so you may pay a pretty penny for parking and still have a trek back to your holiday home!
• Renting – if you are looking to buy a holiday home to rent out, you will want it in an area that will attract tourists but not somewhere that already has an abundance of holiday rentals.
• Things to do – a lot of people buy a holiday home with a picture in their mind of who they want to be, if you are not the kind of person who likes hikes and nature, don’t buy a home in an area where this is the main thing to do in the hopes that you will be inspired. A better option may be to buy in a town near the country so that you have plenty of options for things to do
• Seasonality – if you want a holiday home you will use all year round, check that there are things to do all year round. There is no point buying a home in a touristy beach town in the summer if when you go in winter every shop and restaurant is closed and there’s not a soul in sight.
• Take a trip to the area – go and visit the place you are considering and at different times of the year. Have a look at what amenities, activities and local events are available. You should also view the property prior to buying.

Renting out your holiday home

Many people decide to rent out their holiday homes when they aren’t using it to make some extra money on the side and to try to claw back some of the money they have spent purchasing and maintaining the property. If you are considering this, you should think about:

• When should I rent it out? – If you have bought the property for personal use, you should make sure you plan your own trips ahead of time to ensure that you only let the property out when you don’t want it. However, you should also check that the area doesn’t have any specific restrictions on the time that holiday homes are allowed to be occupied, as this could scupper your plans.
• How much should I rent it for? –Take a look at similar properties in the area for a guide, taking into consideration the size and style of the property. You could even hire a letting agent or holiday company to manage the rental for you, and they may recommend a price.
• Changeovers – If you live miles away, how are you planning to arrange cleaning between guests? Look at local cleaning firms, if it’s a popular tourist area there are likely to be some professional companies locally.
• What about my personal items? – If you leave anything, such as towels, sun loungers, dressing gowns, and toiletries, at your holiday home you should ensure that they are locked in a safe or cupboard if you don’t want your guests using them.
• Leave a welcome hamper – Bread, jam, milk, tea, etc. This will make someone’s arrival easier, as they can have a cup of tea before they rush to the shops, as well as making your home seem more personal. It will also help the tenant see that it’s someone’s home and hopefully they will take better care of it!
• Deposits to cover damages – This is something to consider to save you from losing money if your holidaymakers break things or leave your home dirty.
• Advertising your holiday let  – You could build your own website, but perhaps easier, use one of the many Holiday Letting Agents either locally or nationally, or even an online site like Air BnB.

Buying a Holiday Home Off Plan

If you want a brand-new holiday home, buying ‘off plan’ can be a good option. This means that you buy a property that has not been built yet, you are buying based on the builder’s plans. You may even get to make some choices in its construction, such as the colour of the door, or the windows or floors which are included.

On the other hand, developers of an off plan development can change their minds over the future development of the Estate. This means that the plan of the Estate when you agreed to purchase your holiday home might be quite different from what you get when it is finished. Bear this in mind as your original vision of what you have in mind when buying a holiday home could change over time.

What tax will I pay?

It is easy to forget the various Tax obligations when buying a holiday home, however, we have summarised the main ones below –

• SDLT – By far the largest tax you will pay is Stamp Duty Land Tax, you will pay a larger percentage for a second home than your primary residence. The Stamp Duty will be 3% on top of the normal SDLT rates. There is a calculator on the Government website to work out how much tax you’ll pay.
• Council tax – usually you will have to pay the full amount, but you should check with the local authority.
• Income tax – if you are renting out your property, you will have to pay income tax on the rent you receive, however, this is only calculated on the income after allowable expenses, such as council tax, maintenance, buildings & contents insurance, have been deducted.

Is there a restriction on how long I can live in my holiday home?

Some people who initially buy a property as a holiday home, but then choose to live there all year round, however, some purpose-built holiday homes come with certain residency restrictions. The most common restriction limits occupation to 11 months of the year, so you would have to move out for at least a month.

The Council also emphasises that holiday homeowners must not enroll children in local schools or register with a GP as this can be a burden to the local council’s resources and budgets.

Holiday home insurance

The types of insurance available to holiday homeowners vary. It is advisable not to use regular home insurance or amend your existing policy.

Here’s why:

• Buildings insurance is needed to protect damage to the structure of the building and its permanent fittings and fixtures.
• If you want to protect your belongings when the property is either empty or rented out, then you need Contents insurance and/or personal possessions insurance
• Separate insurance to cover items in the garden, such as deck chairs, summerhouses, table & chairs, BBQs, etc.
• Holiday home insurance covers the property when empty or if rented to friends, family or strangers.
• Accidental damage cover should be included to protect your belongings when the house is rented out.
• Loss of income cover if you are relying on income from the property being let in case the property is damaged and you can’t rent it out.
• Cover that provides alternative accommodation in the event you are unable to stay in the property due to structural damage.
• Public liability insurance if you are renting the house out.

What about Security of Your Holiday Home?

Your insurance cover may only be valid if you take certain security measures. You should think about:

• Crime levels – what are crime rates in the area like? A higher risk may make insurance premiums higher.
• Change the locks – you don’t want to risk an old owner or holidaymaker having kept a set of keys.
• ​Install a key safe – these provide a secure way of storing the key when the tenants arrive or leave. Leaving the keys under the mat isn’t secure!
• Make friends with neighbours and ask them to keep an eye on the property. This can be helpful as they will report any problems to you.
• ​Install a safe – so that you or your tenants can protect your valuables.

Holiday Homes can be a great place to relax and unwind, as well as making some extra cash, however you have just be careful that you are making a sound investment.

Our specialist team of conveyancers can help you with all manner of conveyancing legalities when dealing with your holiday home. Contact our team today to find out more.

Disclaimer – our articles are designed to give you guidance and information.  There is no substitute for proper direct advice, particularly as everyone’s circumstances are different.  If anything in this article may affect you, please contact us for advice that is specific to your circumstances.