The popularity of staycations has been on the rise in the UK for years. These holidays are a great way for Brits to see more of the UK, but also help support local tourism and provide a boost to the economy. And as long as this trend continues, there is a massive benefit for buy-to-let property owners. In fact, many investors are looking at holiday lets as an alternative to traditional buy-to-let properties, and here’s why:
It makes sense that the more properties you own and rent out, the more revenue you will generate. For those starting out with a single holiday rental property, this income can need support from an additional source such as a part-time job or second business. Which in turn limits the time you can spend on your holiday lettings business.
If this is the case, by investing in more properties, you’ll be able to scale your revenue, and become free from the ties of needing for a second income. The more properties you own, and the higher your occupancy rates, the more revenue you’ll bring into the business.
There is, however, no need to wait until your portfolio grows large enough to start generating substantial returns on investment; by buying a few small apartments or houses (or even just an apartment in a shared building) straight off the bat and running them with professional management services, you can generate significant profits from day one whilst continuing to hold down employment.
Build value in your assets
Holiday letting is a long-term investment, which means you can build value in your assets. When you own holiday let properties, they will most likely increase in value over time. And when you sell them down the line, you’ll be able to make more money – an added bonus!
With property prices increasing by an average of 9.6% even during the economically challenging 2022, property has always proven a sound investment.
If you are just starting out as an investor in holiday let property or buying multiple properties, then this is great news for you! By investing in holiday lets from day one, you will be able to scale your revenue and profit as quickly as possible.
You can expect your property to appreciate over the years; after all, people will still want to visit that part of the world in 20 years’ time! If you buy wisely and choose somewhere with potential for growth (like a seaside location) then there’s every chance that if you decide to sell one day on, your home may be worth significantly more than what you paid for it.
Unlike other investments such as shares or property investment funds (where there’s regular work involved to stay profitable), a holiday let requires little attention beyond keeping up with general maintenance duties like redecorating, replacing light bulbs and ensuring drains aren’t blocked. This means housekeeping isn’t too much effort – which helps keep costs down!
Holiday let properties also have small capital gains tax (CGT) rates compared with other residential property types, which means that their returns are higher than houses or apartments.
With spectacular landscape and award-winning beaches on our doorstep, it’s hardly surprising that the biggest motivator for investing in a holiday let is that you can combine owning your dream holiday home with running a successful business and offsetting the cost of your own holidays.
So, if you’re thinking about adding to your portfolio, you choose somewhere you would like to holiday yourself. With beautiful countryside, breath-taking coast and lively towns, they are plenty of fantastic locations to choose from in the UK.
Reduce the time spent managing each property
Setting up tax, finding the right insurance, health & safety, marketing/advertising, choosing a holiday home management service, updating your terms, – the list of holiday let management tasks goes on. It all takes time, but when you’ve done it before it all becomes a lot easier the second time around. You would have built up a database of trusted companies and suppliers that will be able to help with scaling your property portfolio.
And, of course, there are certain tasks you only need to perform once, no matter how many properties you have. Take insurance for example. Rather than taking out multiple insurance policies to cover each property separately, you can take a single holiday let insurance policy with Policy Powerhouse that will cover all of your properties under one single policy. This makes a lot of sense as you’ll only need to pay one policy fee, plus a premium discount is applied for multiple properties.
The more holiday let properties you have, the less time you need to spend on each one. This means you can reduce your management costs and still make a good return on your investment. The cost of managing a single property can be high – especially if it’s difficult to find someone locally who’s willing or able to take care of everything for you. If you have several properties, then the cost per property goes down significantly as fewer staff members are needed overall. However, most investors don’t just consider this in terms of saving money in their own business; they also look at whether they’re spending their time wisely – because time is more valuable than money.
Popularity of staycations in the UK
The rise of taking holidays in the UK – also known as ‘the staycation’ – is undeniably increasing in popularity. With the fallout of the pandemic and complexities of Brexit being key contributors. Demand for holiday lets has positively boomed at an unprecedented rate, as Brits have shifted from travelling abroad to getaways closer to home that feel safer and are less costly.
In 2020, staycation bookings rose by 300%, setting a record for domestic tourism, in addition to the 60.5 million domestic holidays taken by the British, the overall market potential for holiday letting is stronger than ever. The soaring demand reflects a national need to discover holidays closer to home. This is all great news for holiday let owners.
Even with the lifting of Covid restriction that limited travel outside the UK, although overseas holidays are back on the map, Britons are showing an increasing desire for staycations as travel chaos continues.
Airlines including easyJet have cancelled hundreds of flights in recent weeks due to Covid-related staff absences and British Airways announced four months worth of flight cancellations. With uncertainty for many on whether they might get to their destination abroad, holiday staycations are the most guaranteed option for making sure you get a holiday.
Several travel experts have said they believe the disruption is prompting UK tourists to again opt for staycations. The latest cost-of-living crisis is also thought to be influencing people to holiday closer to home, although this is not always the cheaper option.
The popularity of staycations in the UK has risen at an unprecedented rate since the Pandemic. This can be attributed to many factors, but it’s mostly because people are nervous about flying due to the potential for a repeat of Covid-related staff absences. Not only that, but they don’t want to spend their hard-earned money on flights when they could be spending it at home. It’s no wonder that staycations have gone from being something you did every so often to something you do every single weekend. If you want to reap the rewards of this trend, then investing in holiday let properties is your best bet!
The holiday rental market is huge and profitable, especially for savvy investors. It’s a great way to invest in the future and earn passive income. It’s also a good way to diversify your investment portfolio, as you can spread out your risk by investing in multiple properties. And finally, looking into insurances (like Policy Powerhouse) or other services that free up time will make owning multiple holiday lets easier.