FAQs on Buying a Holiday Lettings Business
Q : I would like to buy a holiday lettings business but I’m not sure of the work involved in a) buying it, b) running it. Can you give me any advice, please?
A: First, do some research before you buy. For example, where are properties you want to buy, how many people go there, do they go all year round, how much are similar flats let for? Then consider your potential market, will the flat appeal to young people, those with young families or a more mature element? If you are buying outside the UK there may be different legal formalities to those you are used to so find a reliable lawyer who understands the local requirements. Wherever you buy, make sure you have a professional survey of the flats carried out before committing to purchase.
If you need to borrow then calculate whether the likely letting income is sufficient to cover the mortgage costs repairs, ongoing agents costs and, if necessary, provide your income as well. Also consider raising the mortgage on your own home, if you have one, rather than the flats since this may give a lower rate of interest. Remember that interest rates can go up, so increase your costs and build this into your calculations. If buying, and borrowing, abroad than currency movements need to be allowed for as well.
You need to attract customers. If you intend using the internet then factor in the cost of building a website especially if you intend taking bookings and payment using the site. If you are going to use traditional brochures you need to research the best ones for your intended market.
When it comes to running the operation are you intending to handle the cleaning, repairs, and bookings yourself or use professional help (perhaps even employing someone directly)? If you do not live near to the flats be prepared for regular travel and time commitment if you do it yourself.
There are tax advantages to letting property but these relate to UK based properties. Using an accountant is a good idea to make sure your business is set up to make the most of these opportunities.