With good weather and school holidays upon us, many will be getting ready for our summer holidays, whether we’ve booked them yet or looking to secure a last-minute deal. Amidst travel chaos at airports, a UK staycation will be a stress-free way to ensure a good break. Might a Holiday Let property be the perfect opportunity for existing landlords to diversify and expand their portfolios in a growing sector?
Why are UK Holiday Lets getting so popular?
International travel restrictions throughout the COVID lockdowns have built up a surge in demand for UK staycations. It appears, however, that despite the return to normal life, the UK holiday has not lost its appeal. According to Sykes Holiday Cottages, 62% of people planned to spend the summer break in the UK in 2021, up 50% from 2019. So far, bookings for 2022 are up 35% from the levels in 2019. According to the report, the most in-demand accommodation was Glamping, with bookings for shepherd huts and yurts up by a staggering 423% from 2019. Brits were also open to spending more on their staycations last year, paying on average £940 for their UK break compared to £860 the years before the pandemic.
There is also an influx in demand from international travellers. As our borders have loosened their tight restrictions, many tourists are looking to return to the UK for their summer breaks, and will be looking for more affordable accommodation for their city breaks. Alternatively, they may be warier of the bustling central locations, and looking for a more remote place to stay. Either way, the demand from these tourists will allow property investors to charge competitive rates this summer.
With such high demand comes higher rental yields and income. Sykes’ report reveals that, during the peak holiday season, holiday let owners have the opportunity to earn in one week what a buy to let property could in one month. As such, properties can earn up to 30% more yield than a buy to let. In 2021, the average annual income from a holiday home was just short of £28,000, a 33% increase since 2019, and generated an average yield of 8%. It is no wonder that the market is growing in popularity when property investors stand to maximise their profits most on these types of investments. It goes without saying that securing this level of yields and income will depend on where and what you purchase.
What and Where Shall I Invest?
A safe option for property investors new to the holiday let market would be to purchase either a pre-existing, successful holiday let property, or a new let in an area with proven demand. If you are looking for something more exciting, however, quirky properties always attract attention and are popular with UK holiday-goers, such as cabins, domes, and glamping pods. Sykes’ research revealed that the top three influencers on Brits’ choice of accommodation are:
- Garden and outdoor space
- Proximity to the beach
- Good wifi and technology
Securing a property with these three amenities should set you up in the best way possible to succeed in the market.
The report also revealed the top five earning regions in the UK for 2021. Based on an average income for a two-bedroom property, the most popular locations for holiday lets last year were as follows:
- Cumbria & the Lake District – income of £25,000
- Devon – income of £20,000
- Dorset – income of £20,000
- Peak District – income of £17,000
- Cornwall – income of £20,000
Some properties will be more complex to finance. For example, securing funding for extremely rural properties, or restrictive covenant properties may cause some lenders to be wary. If you are struggling to get started or secure your next investment, our partners at Mortgages for Business can help. Their expertise in the holiday let market means that we can help on the most complex of cases to source the property finance you need.
Mortgages for Business will be exhibiting at the Property Investor Show at London ExCel on 7/8 October 2022