If you are thinking about buying a holiday home, follow this simple guide to help you decide what you would like to buy and how to protect it for years to come.
If you’ve settled on the idea of a holiday home then first of all, congratulations! But now you probably have a lot of questions. In this guide we bring up some factors to consider when investing in a holiday home.
When is the best time to buy a holiday home?
It’s well known that if we want to book the best price for a flight or hotel room sometimes we need to wait until the last minute to snag a better price. In the property market, it can be difficult to tell when it’s the best time to buy a holiday home. If price is the most important factor and the location is determined, off-peak times might be worthy for finding a holiday property.
In general, a property agency provides guides to help you make informed decisions based on your own personal circumstances and your reasons that work for you: rental income, capital growth, lifestyle investment, or both.
Holiday home in the UK or away?
A holiday home means you have it to visit when you wish and let it out to help with the running expenses. Here you can find out some of the top tips to consider before buying a holiday home:
Price: Use property search sites for similar properties and see if the house price has been reduced or increased. It might be useful to arrange a survey (e.g. flooding, subsidence, damp, etc.), and confirm that you can rent it.
Location: buying in the wrong place can be costly, and a popular location is always interesting for the owner or tenants. Picking a property that has both letting and resale potential is a great factor. Do you want to get ideas? Here are our most popular holiday home locations.
Amenities: shops, restaurants, beaches and public footpaths, car parking, ‘bus stops or railway stations are important. All of them will increase the opportunities for letting your holiday home.
Type: a static home, a cottage, an apartment near the beach, a ski chalet, or a villa with pool in Spain or France. All of them are fantastic examples of what a holiday home is: a different location to the home you usually live in. Extra benefits as a garden, a hot tub or a balcony are pluses for a return on investment if you want to let it out.
Cover: you might compare holiday home insurance quotes before purchasing the property to ensure cover for holiday homes is available. Quoting could add information to the potential issues or risks of the property (flood or earthquake area, home improvements, etc.).
Can a holiday home pay for itself?
There is growing interest in buying a holiday home thanks to the tax benefits. Why? Holiday Let (FHL) properties are the new buy-to-let investments due to changes in tax rules and landlord responsibilities. To meet requirements for your property to be classed as FHL the property must be located in the European Economic Area. You must prove that you have let out the property commercially and not just for family and friends. And the property must be let for at least 105 days a year and let stays shorter than 31 days.
Although there’s nothing wrong in NOT letting it out, just using it as an extra home for weekend retreats or Christmas and summer getaways. Enjoyable times and the pleasure that brings you with good company are always priceless.
Can you live in your holiday home permanently?
UK law doesn’t permit you to live in your holiday home for more than 12 months at a time. Council tax is lower on a secondary residence and so you need to decide what your permanent address is for tax reasons.
Can a holiday home be a main residence?
Your holiday home can be your main residence in the UK or abroad, but it wouldn’t be called a “holiday home”. If the holiday home you are buying replaces your main home, you will not be liable for the 3% surcharge on the Stamp Duty Tax. What is the Stamp Duty Tax? You can find out more by clicking here.
What about other countries? British expats who have lived abroad for many years can declare that their main home is overseas and their holiday home is here in the UK. Either way, it is necessary to show evidence and provide documents declaring which one is your main residence for legal and taxation terms.
What insurance do you need?
If you are buying any holiday home with the help of a mortgage, you will be required by the lender to get buildings insurance. If you don’t require a mortgage, you can think about cover for your property in the form of buildings insurance, buildings and contents cover, or just contents insurance.
In general, specialist providers of holiday home insurance offer comprehensive cover and design products which offer specific benefits for your peace of mind. In this way, if you let your holiday, the policy should include liability insurance, insurance for when you leave the house unoccupied, or accidental damage, which covers the cost of an unintentional damage to your property or its contents. If your holiday home is damaged and you can’t live there, holiday home insurance may cover the cost of alternative accommodation.
*The opinions and views expressed in the above articles are those of the author only and are for guidance purposes only. The authors disclaim any liability for reliance upon those opinions and would encourage readers to rely upon more than one source before making a decision based on the information.