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By Mark Blayney Stuart

Holiday lets and how to market them

If you’re looking to generate an income from a second property, it might be tempting to look to holiday lets around the UK.

Some types of property work better as holiday lets than others. “Having stunning views, a chocolate-box appearance, or being situated in a cute rural or fishing village, near a lake or beach, will always attract interest,” says Fiona Angilley, new business manager at Dorset Hideaways in Dorchester.

Returns can vary, but if the property is in a good location, these are likely to be better than those for the same property on a simple tenancy.

However, it is important to consider exactly what you want the holiday let to achieve.

“Is it solely to be used to generate income, or is it perhaps intended to be a family holiday home or future retirement property?” asks Angilley. If your intend to retire there, she points out, while location will always be key, it may be that a bustling tourist destination is not your personal choice when planning for retirement.

The potential landlord therefore has a few things to think about ahead of choosing where to buy. “Once decided, talk to a local holiday let expert who will know the geography of the region well and also the local property market,” Angilley says. “They will have a clear understanding of which areas are popular and attract bookings more easily, versus areas that might struggle to achieve the best return on the investment required in purchasing and setting up the holiday let.”

Understand your customer

At this point, you’ll want to think from the point of view of your prospective guest, in order to maximise those returns and leave you with satisfied customers – that satisfaction will lead to repeat visits from your first visitors, and favourable comments on sites such as TripAdvisor, which will form a key part of your marketing.

“For example, is there a pub within walking distance, and a local shop selling everyday provisions? Are there opportunities for walking nearby?” Angilley asks. “If the property has an enclosed garden or courtyard, a direct view of the sea or water, or is well-positioned in a city centre location near to restaurants, theatres and parks, that can be advantageous.”

And should you allow dogs? “Pet-friendly properties generally attract more bookings than non-pet properties, so catering for our four-legged friends is recommended where possible,” says Angilley.

The finer details

Let’s say you’ve taken the plunge and purchased your holiday let. What about the day-to-day processes of making it work? “You can manage it yourself or appoint a management agent,” says Nathan Tobin, dual branch manager at James Douglas Sales and Lettings in Cardiff.

“Pet-friendly properties generally attract more bookings than non-pet properties, so catering for our four-legged friends is recommended where possible."

Fiona Angilley, new business manager, Dorset Hideaways

“And you’ll need a welcome pack, in which you should include all the information guests might need.” That should include: things to do in the area; nearby restaurants; local amenities and attractions; essential phone numbers; and what guests need to know about the property itself. It helps to make the welcome pack as comprehensive as possible – with everything from how the dishwasher functions to troubleshooting the TV – to minimise frantic phone calls from guests asking how things work.

This is where hiring a management company may come in handy. “It depends on how much you want to be involved,” says Tobin. “It’s great if you’re local, but if you’re far away, a management agent can take as much control as you want to give them.

“They will organise cleaning and maintenance and regular inspections.”

A good managing agent can also offer advice on styling, preparing and equipping the property and introducing relevant contractors to deliver a completed product, Angilley says. “You want a knowledgeable agent who can market your property well by understanding its unique selling features, responding to bookings enquiries professionally and accurately, knowing local information to achieve the best booking levels, monitoring performance to make sure the marketing is always on point, and ensuring the property is always guest-ready with any operational or maintenance issue promptly addressed.”

Finally, there are the legislative details, such as the need for an annual gas certificate and the renewal of the electrical safety certificate every five years. “And insurance – standard home insurance won’t provide adequate cover for a holiday let,” says Tobin. “This is because the owner is not staying in the property. You’ll need specialist insurance to cover liability and accidental damage.”

The tax situation

As with all buy to lets, give some thought to your exit strategy and bear in mind the additional tax burdens (such as capital gains tax and second property stamp duty). However, fully furnished holiday homes, as opposed to standard buy to lets, do bring some tax benefits, if you follow the rules.

“In Wales, if you rent it out on a holiday let basis and it’s available to the public for at least 140 days of the year, and you actually let for at least 70, it counts as a small business, so you won’t pay council tax on it and you may get small business rates relief,” says Tobin. In England and Scotland, meanwhile, commercial lets must be for at least 105 days.

The home must also be in the UK or EEA, fully furnished and, when let, must be let commercially. This means cheap rates offered to friends and family do not count towards the total number of letting days. Plus, the holiday lets must be short term – for no longer than 31 days – over a seven-month period. If you can pass these ‘qualifying tests’, your rental income will be treated more advantageously by HMRC*.

During the off-season, you might be able to offer the property for non-holiday rental, but if you do, these tenants will not be counted as holidaymakers. Still, this could be a good option if you don’t want to leave the property empty in the autumn and winter months.

“A lot of people do something called month-by-month lets,” says Oliver Thomas, sales manager at Orion Sales in the Cotswolds. “For a number of reasons, many people want this kind of short-term let – they might have builders in; or they might have just had a break-up. We can always get people who will want to take this kind of property, in an attractive location, over the winter.”

Holiday rental checklist

Be creative. “Offering a log burner and/or hot tub, accepting dogs and appealing to the couples market can help you rent the property out in winter,” says Angilley.

Think from the point of view of the customer. “If your preference is for a rural location, it’s usually essential that there’s good internet,” she adds.

Know the pros and cons. If the property is coastal, establish if you’re in a flood-risk area and whether that gives you insurance problems or increased costs.

*Tax reliefs referred to are those applying under current legislation which may change. The availability and value of any tax reliefs will depend on your individual circumstances.