Coronavirus hit at the start of the year, with many new rules still in place to help stop the spread of the diseases. A ban on travel within the UK was short lived, and while many people are still choosing to travel abroad this summer, there has been an unprecedented surge in brits choosing to holiday only in the UK.
For many people we have spoken to over the last few months – some who have never invested in property before and some who already have a substantial portfolio – they are considering a move towards serviced accommodation because of the increase in UK staycations. SA is also essentially, a holiday home. A property purchased in the UK in a popular location that can be rented on a weekly basis to individuals or families who are looking to get away from their home and take a break.
According to Schofields, they reported in June 2020 that the number of days holiday being taken now has dramatically decreased – 73% of people have taken no days holiday in April 2020 at all. This will leave many people throughout the country with a backlog of annual leave to take from work and, due to travel restrictions and quarantines, a limited choice of places to choose from, with the UK being top of the list. In June 2020, Citysuites reported that there is an average of 6,600 searches made per month in the UK for 'Staycation'. However, during March 2020 and April 2020, a staggering average of 8,100 searches per month were made for 'Staycation'.
It is therefore fair to comment that in the current climate, the demand is there. You can also use your own holiday home and offset several costs as a fixed asset, making the trip even more enjoyable. The advice is often to choose somewhere you enjoy visiting yourself to make best use of the home. This is often the key motivation for someone when they consider purchasing a Holiday Let.
Holiday lets can be very lucrative. Schofields note that the average occupancy level for holiday lets is between 20 and 24 weeks per year. However, high performing properties in popular locations can achieve over 40 weeks booked. When comparing to a Buy-To-Let investment for example, at peak season, a holiday let can earn you as much in a week as you would in a month through buy-to-let. Holiday let landlords can earn up to 30% more yield than their buy-to-let counterparts.
If you buy the property within reasonable distance to your own home – like all property investments – you could look after it yourself. Check-ins, maintenance, and cleaning etc. could be something you manage yourself, or someone in your family might like to assist with. This would save on costs here, but instead be using your time so it depends where you place value and importance. Guests will expect all appliances, fast internet, good central heating system… the list goes on. These are items that not only will you have to spend on initially, but also pay to maintain and look after throughout the year.
The size of the property that you purchase can also affect the return that you receive. The more bedrooms, bathrooms and generally a larger property will allow for higher rental prices and appeal to larger groups therefore accessing a wider market. In theory, it will therefore generate more income throughout the year.
While they can certainly be a good investment, with positive income and revenue to be made, there are many factors to consider before making such a commitment. Like all investments, it will only be profitable if treated like any other successful asset or business.
On the flip side, there are ongoing costs continually throughout the year that are often not considered before buying. Like all property investment, it pays to know these before hand and be sure on all your numbers. Holiday Let income can also be seasonal, if there is a mortgage or any other payments on the property, you will need to ensure these are covered during the months that your property is empty.
Overall, it is hard to say what the permanent changes in travel trends will be. It is highly likely that the pandemic has put so many people off travelling abroad for an exceptionally long time. This could therefore mean that UK staycations will continue to increase in popularity for the foreseeable future. Interest rates are low on lending right now, making it an even more attractive time to consider buying a property like this.