Are holiday homes the new buy to let?

Budge over buy to let, it’s time for holiday homes to take centre stage. Changes to tax legislation have taken the shine off buy to let and holiday homes are now in the property investment spotlight. Quoteline Direct looks at whether holiday homes really are the new buy to let.

Britain’s two million buy to let landlords are beginning to feel the financial pinch as changes to tax laws continue to be rolled out. The first blow came in 2016 with a 3% hike in Stamp Duty for anyone buying an ‘additional property’ followed by a 25% cut in mortgage interest relief the following year. Next month landlords will lose a further 25% tax relief so it’s hardly surprising they are having difficulty balancing the books.

While traditional buy to let landlords are being clobbered, owners of holiday homes (or more specifically ‘furnished holiday lets’) can continue to deduct mortgage costs and enjoy other benefits such as generous ‘wear and tear’ allowances and the ability to ‘roll-over’ capital gains. Suddenly holiday homes are beginning to look like an attractive investment opportunity, but it’s not all about the tax breaks.

Economic uncertainty caused by Brexit and the falling value of sterling mean more people are holidaying closer to home. Staycations are the new vacation and increased domestic demand has been matched by record overseas visitors keen to cash-in on the weak pound.

High-profile short-term letting sites have shaken-up the hospitality industry and travellers are turning their backs on hotels in favour of holiday lets. Demand for holiday homes has never been higher and it’s never been easier to find willing holidaymakers.

Pick the right property in the right location and a holiday home can earn as much in a week as a buy to let can earn in a month. Letting a holiday home is likely to take more management, you’ll need to learn a new set of skills and you’ll need to safeguard your investment against different risks; but get it right and it could prove a lucrative long-term investment.

The first rule of investment is to protect your assets and that means making sure that you’ve got the right insurance. Holiday homes can be risky to insure as policies need to cover unoccupied periods (where unattended problems such burst pipes can have catastrophic consequences), additional security concerns (empty properties make tempting targets for thieves and keeping track of keys isn’t always easy) and public liability (to protect you against claims made by members of the public).

However, the good news is that with help from the right broker holiday home insurance needn’t break the bank. With nearly 50 years’ experience Quoteline Direct is one of the country’s best-loved independent insurance brokers and we’ve got access to some seriously competitive deals.

To find out more visit our holiday home insurance pages, where you can get an online quote and arrange online cover, or Tel: 0161 874 7753 to speak with a member of our team.