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  • Holiday Lets

    Holiday let - every portfolio should have one

    Nick and I have long been advocates of U.K. holiday lets.

    We first started writing about them back in 2008 and bought a couple of South coast holiday lets that year.

    Our initial reasons for favouring them remain unchanged, but other compelling rationale have since come into play.

    Back in 2008, it was our view that the economic crisis combined with increasing terrorist activity and social unrest ,would see more people holiday-ing at home.

    Additionally, in times of hardship, people look to nostalgia to feel better about life and return to activities from their own childhoods.

    People of my generation were brought up on British seaside holidays - donkey rides, candy floss, fun fairs, and building sandcastles. When recession hit, they wanted their own children to experience the same as they did as children.

    This powerful motivation was combined with a resurgence of interest in the British coast through TV programmes, magazines, and conservation projects such as coastal paths being reinstated.

    We called it a "renaissance of interest" in the great British coast.

    See - U.K. holiday lets for cashflow/The renaissance of the great British seaside holiday ... ?

    Whilst Britain has over 12,000 miles of coastline, nobody is making any more coast or sea views.  With scarcity comes value.

    Properties with coastal and sea views have always commanded a premium price, sometimes up to 20% more than a property without a sea view.  Additionally, elderly people who are cash rich after selling their family home, often want to retire by the sea, thereby making prices robust.

    We call this "coastal appreciation".

    See - Coastal property rocks!

    With the advent of the internet, and more and more people working from home, we are no longer tied to city centres and the daily grind of the commute.  The Halifax survey has revealed that 80% of towns enjoying mass inward migration were coastal towns.  (Whereas, mass outward migration was recorded from city centres, the highest being from Birmingham).  This new trend again ensures that coastal property prices will continue to remain intrinsically strong, safe, predictable, and robust.

    Over the last decade, we have also seen the rise in popularity of the "stay-cation" - where people take lots of short breaks and long weekends.  Holiday lets within a 2 hour drive of a major city centre have hugely benefited from this, achieving bookings throughout the "low season" months.

    So holiday lets tick a lot of boxes:

    1.  Increasing demand

    2.  A global marketplace

    3.  Robust capital appreciation

    and now - since the advent of Section 24 - they are even more attractive from a tax perspective.

    Here are the headline downsides for residential property investors:

    • Tax relief on mortgage interest to be limited to 20%
    • Withdrawal of the 10% wear and tear allowance for furnishing your property

    Now let’s compare this to holiday lets:

    • Capital allowances — you can claim capital allowances on the furniture and other items that you buy for the property, which may be higher than the 10% wear and tear allowance. Accommodation is considered to be ‘furnished’ if the tenant is entitled to the use of furniture. In practice, due to the nature of holiday lettings, queries about whether the accommodation is furnished are unlikely to arise.
    • Losses on holiday lets may be property losses offset against your total income (including employment income), provided the loss was due to the above capital allowances. Any claims of this nature must be made within 22 months after the year end when tax relief is given.

    Further information:  Are Holiday Lets The Next Big Thing? 

    Here are the key things a holiday let needs to have to achieve maximum occupancy:

    1.  Within a 1.5 hour drive of a major city - to capitalise on the long weekender trend.

    2.  A year-round programme of activities and events in the area to increase occupancy into the low-season months.

    3.  A great safe and sandy beach for families to enjoy.

    4.  Fine dining options in the area.

    5.  A property that is externally attractive, or has great sea views, that will stand out in marketing photos on the portals.

    If you have a single occupancy BTL that ticks all the above boxes, it might be worth considering turning it into a holiday let.

    Some considerations:

    1.  Holiday lets require specialist finance and insurance.

    2.  Holiday lets may be subject to business rates for council tax.

    3.  When the property is empty, you are paying the mortgage (if you have one), council tax, and standing utilities.

    4.  If you are paying for services like cleaning etc., it means you have had bookings!

    From an investors point of view, coastal property is perfect for holiday lets and can be an attractive addition to a portfolio to diversify and spread risk.  (Be sure to check for flood risk and coastal erosion as part of your due diligence though!).

    For further information on coastal property, visit the Holiday Lets Tribe which includes hints and tips on sourcing, setting up, and marketing a holiday cottage to achieve maximum occupancy.

    Related coastal property content:

    Why holiday lets are the new BTL

    Guide to coastal holiday lets

    Best place to buy a first holiday let

    East Sussex - untapped investment potential

    Investing in Margate

    PT TV: Holiday lets in Cornwall

    Cheaper or dearer area for holiday let? 

    Holiday lets vs. standard BTL

    Top 10 seaside BTL hotspots by rental yield. 

    Are there massive opportunities in Blackpool? 


    I ran a couple in Northumberland and it was bloody hard work I had a Highly Recommended rateing and on the surface it looked good

    But when I took into consideration all of the Bills and effort with change overs every Sat between 10am and 4pm it was not worth the effort

    Pound for pound at the end of the day the profit was even  

    You now also have Trip Advisor and a coupe of bad reviews will bring issues

    I have a close friend who runs a hotel and he has shown me reviews which have been posted to give his business a ban name from his competitors

    I still own the Ex Holiday homes and I will not be going into that market again its not worth it even with S24

    Best of luck to others that do But its not an easy ride its true self employment

    and don't forget Holiday Homes are not loved they are seen as taking homes from locals and I think one Council in the south has banned them


    Learn Change and Adapt ?????

    I'm surprised you state even factoring in S24 that FHL are no better than normal resi if a mortgaged sole trader.

    But you have walked the walk so know what you are talking about.

    What if the LL was able to live very near the FHL and do the majority of the work in managing them!?

    I was just thinking that many LL might like a change of scenery and take their capital and invest in FHL and live effectively next door to their FHL business!

    The idea of coastal living has its attractions especially if you can reach major cities fairly easily.

    No risk of pollution levels being excessive

    Though apparently studies have shown that there is pollution from local shipping emissions!

    The idea of selling up one's normal rental properties and moving to the coast is quite beguiling.


    Hi DL,

    It sounds like you were self-managing your holiday lets?

    I don't manage ours. We have a lettings agency/property manager, and a cleaning company.

    I have negotiated on all our commissions.  The lettings agency I negotiated down from 20% to 17% and the cleaners I negotiated down from £10.50 per hour to £9.50 per hour.  

    This can help increase margins.

    For what you can get for a month for a single occupancy BTL, you can typically get for a week for a holiday let.  Therefore, if you are able to increase your occupancy beyond the holiday "seasons", they can be very lucrative.


    I used to use Blake's country Cottages at the time who were good but charged I think 25% for there services

    I did find good business and my Occupancy was around 70% but the business would die off in the Middle of Sept and I would have very little trade until Christmas and New Year then it was quite again until Easter when it was full till September

    If you have good Occupancy levels it may add up I enjoyed it but it was restrictive on my time

    But pound for pound I did not make much more that I did on just a Bogg standard BTL

    I found you really had too be on the ball every thing needed to be 110% if it wasn't  you were set for complaints

    Now with Trip Adviser Ect a few bad reviews and it would impact on your occupancy levels



    Learn Change and Adapt ?????

    I don't buy this that competitors post bad reviews.

    If you believe your business has been subject to a bad review, you can contact Trip Advisor and get it removed.

    You know the names of guests who have stayed with you.

    If someone not of that name posts, or uses a false name, then you can legitimately claim it is false and get it deleted.

    The transparency of the web stops all this kind of nonsense and people creating fakery.

    I also believe that people take in multiple inputs, some of which may not be 100% positive, and build their own picture.  They look at who is making the review and see if that person resonates with them.

    For instance, if families complain about a holiday let not having enough living space, and I am going as a couple, that review would not influence me not to book the cottage.


    It happens more than you realise Vanessa

    But I take your point about having names who have stayed with you ?


    Learn Change and Adapt ?????

    what type of mortgage would you buy a holiday let with? or has to be cash:>


    There are a handful of lenders who will provide a mortgage on a holiday let. They will want to know the annual rental figures, either from accounts or a lettings agent if it isn't currently let out. They are similar deals to BTL - min 25% deposit and interest only is fine but as I said not many lenders do them.


    When I purchased mine I purchased as  a BTL

    and then I operated as  a Holiday Home the lender at the time was not bothed that I changed  into a holiday let

    But that was 20 years ago so things may have changed


    Learn Change and Adapt ?????

    Just came across this "oldie but goldie video" about increasing occupancy in a holiday let: