Unlike standard rental properties, with holiday lets you can hike up the prices over peak periods such as summer, Christmas, school holidays and bank holidays, though you’ll probably never be able to charge quite as much as the £5,700 per night these luxury Scottish digs expect to fetch during the May bank holidays December Global Holidays. However, you’re also likely to have periods in the off-season with far fewer visitors paying lower prices if you’re in a traditional holiday area.
City centre apartments can have greater year-round appeal, and those a short commute from major cities such as London are more likely to be booked for weekend trips than more isolated destinations such as Cornwall.
Thanks to the explosion in popularity of sites like Airbnb, tourists are increasingly booking holiday lets as opposed to hotels and tourism generally is on the up in the UK. According to the Office for National Statistics Travel Trends report for 2014 (the latest available), visits to the UK rose 5.3% in 2014, and were at the highest level since records began in 1961. Visit England research suggests the number of UK residents taking holidays domestically has also increased in recent years, and with growing fears about terrorism abroad, this is only likely to rise further.
The good news in terms of funding a holiday let is that you’ll only need around the same deposit – roughly 25% – that you would with a buy to let property, though as with the rest of the mortgage market, the best rates are reserved for those with low loan-to-value products.
The bad news is there’s a much smaller range of products to choose from. While there are more than 1,000 buy to let mortgage products on the market today, only a handful of lenders offer holiday let mortgages and requirements can be more stringent than those of buy to let mortgage providers. For example, Leeds Building Society, one of the main lenders in this market, requires the main applicant to have a minimum income of £40,000, whereas most buy to let lenders require just £25,000.