With staycations on the rise, owning a second home brings a whole host of benefits. What could be better than owning your ideal getaway, to enjoy with loved ones throughout the year?
There’s a big financial incentive, too: if you pick wisely, your second home could generate additional income, putting more money in the bank for your retirement years.
Whether you’re renting your holiday home out or flipping it for a profit, it’s important to ensure your investment is protected. Going for a property situated inland is a smart move in today’s ever-changing climate, as it’s potentially less vulnerable to the effects of severe weather and land erosion, unlike properties in popular coastal destinations.
Since you won’t be living in your second home full-time, reliable holiday home insurance
is a necessity. Insurance Choice can arrange the right holiday home coverage for you, working with our carefully selected insurers, chosen for their specialist expertise.
We know a thing or two about holiday home investments, so take a look at our top holiday home tips and locations…
Are holiday homes worth the investment?
Before we explore the best inland hotspots, let’s consider whether holiday homes really are worthwhile investments.
Factors such as Brexit uncertainty, the weak pound and security concerns mean an increasing number of Brits are choosing to stay on home turf when vacationing, while inbound tourism is on the rise again.
When investing in a holiday home, it’s key to remember, this isn’t just for pleasure: it’s a business venture. If you already own one property, you’ll be liable for a 3% increase in stamp duty.
Consider elements such as holiday home insurance cost, upkeep and desirability, plus the time commitment required. Do you want the headache of dealing with guest queries and issues? If not, you may want to consider paying a third party to manage the property for you.
Is the property somewhere you, your family and friends would want to go? You deserve to enjoy the perks of a second home, too; while it’s important to pick a location attractive to customers, don’t forget your own personal tastes.
Let’s take a look at some holiday-related stats to help you decide where to buy your holiday home.
- 3 in 10 domestic vacationers plan on enjoying more of their holiday time in the UK this year.
- Visit Britain forecast a total of 38.9 million inbound tourist visits in 2019, up 3% from 2018, as well as a 7% rise in spending.
- Reports suggest owners can rake in around £18,000 annually, dependent on property location, type and guests, among other factors.
Unlike buy-to-lets, holiday homes are categorised as businesses rather than investments, so owners qualify for many tax advantages that don’t extend to landlords
Holiday home owners with mortgages may offset interest against rental income when calculating tax.
They can also deduct other costly add-ons such as: maintenance; expenditure on furnishings; cleaning fees; council tax; utilities; advertising and management overheads.
Holiday home insurance premiums are also included: all the more reason to get covered!
In order to qualify for these benefits, the second property must fall in the ‘furnished holiday let’ (FHL) category.
Furnished Holiday Let criteria:
- It must be furnished
- It must be available for lettings 210 days of the year, at a minimum
- It must be let 105 days per year, minimum
- It cannot be occupied for more than 155 days per year by long-term tenants
- It must be located in the UK or in Europe.
If the property is inhabited by tenants leasing continuously for more than 31 days in a tax year, it no longer qualifies as FHL. Therefore, owners should keep a close eye on the length of stay guests book in for.
You must be able to demonstrate evidence of the fact you’re renting your property to guests for short periods of time, and receiving payment in return – this will come in handy when the taxman combs through your accounts.
Bear in mind, purchasing a second house doesn’t equal automatic FHL status. You’ll have to go through a 12-month probationary period, during which you’ll need to tick all the FHL criteria boxes; this makes safeguards such as holiday home insurance
all the more important, in the event any damage occurs during vacant periods.
Overall, it’s clear that second home ownership can be highly lucrative when carefully planned and considered, but it’s wise to consult a seasoned accountant before committing.
Now, let’s take a look at the best inland destinations for UK holiday homes…
The largest Area of Outstanding Natural Beauty in England and Wales, the Cotswolds never fail to attract hordes of visitors. Globally renowned for their chocolate box cottages, beautiful countryside and bucolic towns, a holiday rental here comes in pretty steep, whatever the season – a major money-maker!
Whilst a property in this neck of the woods tends to be pricey, it will likely be in high demand throughout the year. Charming towns such as Stow-on-the-Wold and Bourton-on-water offer quaint appeal, whilst stately homes such as Blenheim Palace, Highgrove Estate and Kelmscott Manor will draw in history buffs far and wide – the historic city of Bath is a stone’s throw away, as well.
Many tourists flock to the ‘Wolds’ for a slice of the high life: luxurious spas and tasty local delicacies such as Cotswold cheese abound. Nature lovers can take in the beauty of Kiftsgate Court Gardens and Batsford Arboretum, while an abundance of scenic hiking trails make the Cotswolds a haven for fans of the active life.
A second home in Edinburgh is another diverse addition to any property portfolio. In the New Town section of the city, tourists can take in elegant Georgian architecture. In contrast, the Old Town is made up of labyrinthine, medieval streets and Reformation-era buildings.
During the globally renowned International Festival and Fringe, owners of reputable holiday lets will find customers tripping over themselves for rentals. Even when the notoriously frosty winters come around, Edinburgh draws the crowds, offering a rich array of festivals - from food to jazz – as well as twinkling Christmas lights and seasonal markets.
Tourists can explore the rich tapestry of Scottish history, taking in Edinburgh Castle, 17th
Century vaults and the Scottish National Gallery, while walkers can enjoy rambling around Arthur’s Seat, an extinct volcano in Holyrood Park.
Don’t underestimate Edinburgh’s cosmopolitan clout either: venture to Leith and choose from a variety of Michelin-starred dining establishments, feasting on fresh seafood and sipping world-class whisky. Venture along the Water of Leith, a designated Urban Wildlife Site, which winds through the city, all the way to Leith docks – a rich variety of birds and wildlife can be found along here.
The Lake District
The Lake District is one of the UK’s most breath-taking areas, with vast, rolling landscapes, scenic blue lakes and meadows filled with wildflowers – there’s a reason Romantic poets such as Wordsworth wrote of the area so often.
Purchasing a holiday house within this 885-square-mile wonderland is a savvy investment. The beauty of the lakes and the surrounding scenery pulls visitors back year after year, just as it will family and friends who come to stay.
Stunning lakes such as Windermere, Derwentwater and Ullswater offer scenic boat tours, and with some of the best walking trails in the world right on your doorstep, there’s never a dull day. Fitness fanatics can try tackling Helvellyn, England’s third-highest peak, then go climbing, gorge walking or mountain biking.
Children will love The World of Beatrix Potter, a miniature theme park, or, if you’re a major fan, consider visiting the author’s old home, Hill Top, a 17th
Century cottage. There really is something for everyone here.
The Peak District
You’re bound to get plenty of enquiries rolling in, should you purchase a second home in the Peak District. Spread across the southernmost hills of the Pennines, the Peak District National Park is one of England’s most popular walking destinations.
If you, your family and friends are fond of outdoor pursuits and eye-catching vistas, look no further. The White Peak is ideal for less strenuous walks, whilst the Dark Peak calls for more serious gear. Favoured trails include the Pennine Way, which runs as far as the Scottish Borders.
Avid explorers can take caving trips, touring the Peak District’s limestone caves, while seasoned climbers can take on gorges, tors and crags. The Pennine Bridleway is perfect for cyclists, as is the High Peak Trail.
The Peak District isn’t all plush dales though: historic stone villages and stately homes are additional tourist-traps. Chatsworth House, the 14th
Century Cathedral of the Peak and Peveril Castle are rich in historic intrigue, while Buxton Crescent & Thermal Spa is a blissful blend of past and present.
The Cairngorms National Park
Consider purchasing a holiday home in Cairngorms National Park and enjoy your very own slice of rural Scottish beauty. Double the size of the Lake District, it’s bursting with rivers, lochs, mountains and forest paths.
Nature lovers and ski fanatics alike flock here every year to enjoy 55 Munros (mountains higher than 3,000 feet), as well as five of the highest mountains in the UK.
You’ll almost certainly find your second home fully booked during ski season – in fact, the Cairngorms is the most popular skiing hotspot in the UK. Active holidaymakers will love trying outdoor pursuits such as pony treks, mountain-bike trails, cross-country skiing, and even husky racing!
Possible day trips could include: the Glenlivet Distillery, a part of the globally celebrated Malt Whisky Trail; 13th
Century castle Loch an Eilein; a steam train journey on the Strathspey Railway. Finish off with an evening trip to Cairngorms Dark Sky Park, for crystal clear night skies and a spot of stargazing – holiday heaven.
5 top tips for holiday home success
- Ensure customers arrive to a consistently clean, fresh home, with high quality bedding and décor – good reviews are your bread and butter.
- Optimise your holiday home’s online presence, making it easy to find in online searches and adding plenty of details regarding its location, features, and more.
- Get reliable holiday home insurance so you’re covered in the event of damage or theft
- Consider location before purchasing a second home. Will it attract potential customers? Is it near a national park or popular city?
- Differentiate your holiday home offering by opting for a less commonplace property, such as a log cabin or barn conversion, and add appealing extras such as a hot tub.
Are mortgages available for holiday homes?
If you’re thinking about investing in a second house, you may be wondering whether or not you can supplement the purchase with a mortgage.
The good news is, you can, but they do differ from standard and long-term rental mortgages – you’ll need a holiday let mortgage, specifically.
Holiday let mortgages are less widely offered, so make sure you do your research, taking into account any restrictions such a mortgage may have.
Protecting your holiday home investment
A holiday home comes with an added layer of risk. You’ll be renting it out to strangers, and you can’t keep watch over the property at all times. Your second home will likely be left empty for blocks of time, making issues such as leaks or burst pipes more likely, and, potentially, more devastating.
You can take ample precautions and still fall foul of theft or damage – be it intentional or accidental.
Why should I get holiday home insurance?Holiday home insurance
helps protect against such risks. Most insurers will not cover a second home under a standard policy, as holiday lettings come with different risks attached.
Aim to get holiday home insurance that covers:
- Theft and burglary
- Accidental damage
- Public liability – in the event a guest gets injured at your property
- Legal cover – protects you against costs incurred if you’re sued
- Storm damage
With Insurance Choice, you’re in safe hands. We understand how precious investments such as these are, often forming part of a retirement plan or much-needed nest egg. We work with carefully chosen insurers, who specialise in providing holiday home insurance tailored to each individual’s needs and budget.
Make sure you’re covered – get a quote today