There’s an increasing demand from buyers looking for homes with letting properties in the grounds or the possibility to earn an income from the land, whether it be shepherds huts, lodges or glamping. Properties with these kinds of opportunities are drawing people to consider moving to the countryside, where they can own land and/or lodgings and simultaneously earn an income from the property enabling a change in lifestyle too.
People are looking more and more to simplify their lives and get away from the hustle and bustle of town living. In the past these kinds of buyers were nearing retirement and looking for an income to supplement their pension. Nowadays the buyers are younger, maybe with school age children, and are looking for a healthier lifestyle for themselves and their family. In many instances both are working, yet as the children grow up and go to school, the partner that has been the primary carer now has more time on their hands and can potentially has the time to run the holiday lets business.
These types of buyers are usually very focused and have already moved into rented in the area they are looking in having sold their previous family home. They are in a good position with cash or mortgage arranged and are prepared and able to spend time looking for the right property, so can be on estate agents databases for a considerable amount of time looking for the perfect property.
You’ve maybe been on holidays in self-catering accommodation and paid a great deal of money to rent out a holiday home. This rental figure looks like a great deal of of money for the homeowner to make, but remember that’s not all profit, and as with any business there are expenses, and costs attached. It’s worth asking the current vendor and estate agent about income potential and earnings from any prospective property, and also calculating your own estimates to see how much income you can make.
When considering a property you should ask what kind of income the letting properties are achieving and what the approximate costs are. Owners are wary to give audited accounts before you have viewed their home but an overview is very helpful. Once you have decided on a property you should ask for the accounts for a couple of years. When analysing the accounts it is always good to talk to the owner about them. Some of the costs/expenses that are put through the accounts will relate to the owners living costs and will include management fees, office costs, heating, electricity, mortgage interest, etc. This is key as it reduces their overall living costs for the owners and is a hidden bonus. In addition the costs may be artificially high purely for accountancy purposes to mitigate tax but it is always good practice to contact an accountant to study the accounts.
Some potential buyers get too focused on the income and they forget they are moving for a change in lifestyle. Remember once the holiday makers have checked in your time is free until the next check out. You may not be earning the same amount that they were in their previous careers but they will probably, be less stressed, enjoy life more and able to spend more quality time with their family.
A perfect example of a couple who got the balance just right is the former owners of Pridhamsleigh Manor in Ashburton which sold recently. They totally refurbished the major part of a 18th Century manor house and 3 barn conversions, of these, they only let two out always keeping one empty for family and friends. They managed it themselves and only took bookings from March to October which earned them enough for a lovely lifestyle and left them time to travel when the barns were closed, perfect!
More and more buyers don’t just look at the current income of the property, they are also interested in the potential of increasing this income.
Frequently sellers for these kind of properties are often retiring and have therefore not updated their letting properties as they have lost their initial exuberance for the marketing and running of the properties. Many are not aware of all the online marketing tools that you can use to increase the bookings. Equally holiday let guests are becoming much more discerning, they want higher quality finishes and a luxury feel, and they are also prepared to pay a lot more for this. There are some easy fixes and inexpensive things that you can do to raise that weekly rate. We often advise clients and purchasers what they can do and have close links to Bespoke Devon a high end Holiday Property Management company that can also give advice.
If the property has some land, you can opt to build further property, or an another option would be to create a glamping field or install Shepherds Huts. Please note that you should always take planning advice before going ahead.
Many buyers are wary of buying a property with a lot of acres as they don’t know what to do with it and perceive it as a management headache. The properties with holiday lets are often converted farms and come with land that scares a lot of buyers – especially those who have been living in urban or suburban areas.
However help is at hand, and land can usually be let to a local farmer who will look after it and maintain the upkeep of the hedges, fences and gates. You will not receive a lot, or any rent, for the land, but it means the day to day running of this is not your responsibility and will hopefully stay an asset to the property. A great example of this is Lower Tideford Farm which has approx. 30 acres of land of which 25 acres is let to a local farmer who keeps it immaculately. An agreement with the farmer about what he can do on the land should be agreed at the outset, as you may not want a pig farm next door to your holiday lets!
As buyers get younger they are looking for less remote properties that also have access to schools and amenities – and are not too far away from villages and towns with facilities. Buyers should also consider how much of the year they want to rent their properties. If you want to let out all year round then you will need attractions that appeal to all ages which are open throughout the year.
Out of season you may attract older holiday makers looking for walks, historic villages and towns to explore, as well as good pubs and restaurants. Some good locations for all round letting include Dartmoor, Coastal South Hams, the North Cornish Coast and St Ives.
There is record amounts of people holidaying in the UK and this is set to increase in the future especially during the Brexit transition. You should take into account this increasing market when looking at the bookings. One of the largest holiday let companies, Sykes, has carried out some recent research of their customers and has found that 25% of the people polled in the Staycation Index said that the prospect of Brexit had encouraged them to holiday in the UK. They also reported 36% increase in booking in 2018. Sykes Staycation Index
This is a complex matter as there are a number of properties involved and taking advice can save you many £1,000’s. Francis Clark Accountants that specialise in advice on holiday homes and these types of purchase have produced a good article about this: Holiday Lets Tax
Buying a home with letting properties appeals to many people looking for a better life. Running these types of businesses is not easy and can be hard work but the lifestyle advantages are huge and the business can be very rewarding, especially when you feel that you have helped to make someone’s holiday a truly special and memorable occasion.
With over 20 years experience in selling holiday homes in the South West we are ideally placed to give no obligation advice. Please contact us to discuss the marketing or purchase of your next home.