Nearly one in five considered buying a British holiday let as the pandemic cut off travel abroad – and it was under-35s who were most keen on the idea, according to new research.
Some 17 per cent have considered buying a second home in the past two years, with those aged between 18 and 34 most likely to have done so, according to Suffolk Building Society.
But half said they would have looked into buying a second home regardless of the pandemic, suggesting that the current popularity of holiday homes is set to continue even though travel restrictions have now been lifted.
Home from home: 17% of Britons thought about purchasing a holiday home to rent out in the past two years, with popular locations including Devon, Cornwall and the Lake District
This was compared to 32 per cent who said they had been influenced by Covid.
Devon and Cornwall remain the most popular locations for would-be holiday let landlords, followed by the Lake District, Peak District and Yorkshire Dales.
City-dwellers were particularly keen on the idea, with 32 per cent of prospective landlords being from London. A further 19 per cent hailed from the West Midlands.
The building society said both the volume of, and total value of, completions for new holiday let purchases doubled between 2020 and 2021.
This may have been influenced by the stamp duty holiday, which caused a rush of demand across the whole property market.
The portion of any property purchase under £500,000 – including second homes – was exempt from the standard stamp duty charge between July 2020 and July 2021.
While buyers still needed to pay the extra 3 per cent-plus surcharge for second homes, the holiday allowed them to cut their stamp duty bill by around a third in most cases.
By the sea: A home on the coast was a priority for 30% of would-be holiday let landlords
Suffolk BS found that the setting of the property was the most important factor for potential buyers, ahead of other considerations such as renovation potential.
Just under a third said they wanted a property that was in or near beautiful scenery, while 30 per cent were looking for one near to a beach or coastline specifically.
Just shy of a quarter wanted a property in a popular tourist destination, while 28 per cent wanted one that did not require much upkeep.
Suffolk Building Society’s head of mortgages, Charlotte Grimshaw, said: ‘The pandemic helped many of us rediscover what the UK has to offer, and this of course also has a positive impact on the environment too.
‘Instead of automatically jetting off to warmer climates, eco-conscious holidaymakers are realising they can enjoy numerous destinations around the UK whilst minimising their carbon footprint and supporting domestic tourism at the same time.’
But Grimshaw was keen to stress that buying a home was not a decision to be taken lightly.
She urged potential buyers not to get swept away by their emotions, and instead to carefully consider the financial aspects of investing in a holiday property.
This is particularly important for those planning to buy with a mortgage, as getting a loan for a holiday let can be harder than securing one on a property to live in.
‘Prospective landlords would be wise not to get carried away in the holiday spirit as the purchase needs to stack up financially too – especially for those who require a mortgage on their holiday let property,’ she said.
‘Our advice to anyone considering this route, would be to ensure you understand the criteria that mortgage lenders will be looking for as it can be quite different to a standard residential mortgage application, or even a standard buy to let mortgage too.
It’s worth taking the time to understand the market, and check out the competition before falling in love with a property that isn’t viable in terms of lettings
Charlotte Grimshaw, head of mortgages, Suffolk Building Society
‘Before jumping on the bandwagon, potential owners should do their due diligence.
‘Consider the financial commitments of not just the purchase but the maintenance, taxes, and other expenses such as cleaners and gardeners.
‘It’s also worth taking the time to understand the market, and check out the competition before falling in love with a property that isn’t viable in terms of lettings.’
For those still hoping to find their dream holiday property, the building society has complied a list of top tips when seeking a mortgage.
Getting a mortgage: Ten tips for holiday let landlords
Getting a mortgage approved for a holiday let can be trickier than on a main residence
1. Be aware that many holiday let mortgages require a landlord to have a mortgage, own their main residential property first, or have buy to let properties already – and in some instances, a combination of these
2. Understand that some lenders also have age restrictions for first time landlords, even if they are already a residential homeowner
3. Affordability assessments for holiday let properties is usually calculated on the property’s rental potential rather than personal income and outgoings, but the lender will still want to understand the applicant’s financial position
4. Applicants may have to demonstrate a minimum income set by the lender but this income can often be from a combination of employment, self employment, investments, pensions etc
Buyers should check whether homes on holiday parks breach their lender’s terms and conditions
5. Be prepared to show third party evidence of rental value in low, mid and high seasons from a verified lettings agent – even if not planning on using an agency to manage the property
6. Expect that the property will also be assessed by the mortgage lender. Properties in holiday parks, caravans or lodges, and those of unusual construction method may not always be accepted
7. Applicants should not assume they can market their property on short term lettings sites such as Airbnb and Vrbo – some mortgage lenders have certain rules that prohibit this
8. Check the amount of personal use allowed so as not to breach terms and conditions. Mortgage companies will always allow the owner a certain amount of personal use but this can vary
9. Check whether the mortgage lender has a limit on the number of holiday let or buy to let properties that the landlord is allowed to own
10. Specialist holiday letting insurance must be arranged with public liability cover (typically minimum £1million) included
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