Nearly one in five have considered buying a British vacation rental as the pandemic halted overseas travel – and it was those under 35 who were most excited about the idea, according to news research.
Some 17% have considered buying a second home in the past two years, with people aged 18 to 34 most likely to have done so, according to the Suffolk Building Society.
But half said they would have considered buying a second home regardless of the pandemic, suggesting the current popularity of holiday homes is likely to continue even though travel restrictions have now been lifted.
Home away from home: 17% of Brits have thought about buying a holiday home to rent in the past two years, with popular locations including Devon, Cornwall and the Lake District
This was compared to 32% who said they had been influenced by Covid.
Devon and Cornwall remain the most popular locations for would-be holiday rental owners, followed by the Lake District, the Peak District and the Yorkshire Dales.
City dwellers were particularly enthusiastic about the idea, with 32% of future owners being from London. A further 19% were from the West Midlands.
The construction company said the volume and total value of completions for new vacation rental purchases doubled between 2020 and 2021.
This may have been influenced by the suspension of stamp duties, which caused a sharp increase in demand throughout the real estate market.
The part of any property purchase below £500,000 – including second homes – was exempt from standard stamp duty between July 2020 and July 2021.
While buyers still had to pay the additional surcharge of over 3% for second homes, the holiday allowed them to reduce their stamp duty bill by around a third in most cases.
By the sea: a house on the coast was a priority for 30% of potential vacation rental owners
Suffolk BS found that the setting of the property was the most important factor for potential buyers, ahead of other considerations such as the potential for renovation.
Just under a third said they wanted a property in or near beautiful scenery, while 30% were looking for one near a particular beach or coastline.
Just under a quarter wanted a property in a popular tourist destination, while 28% wanted one that didn’t require a lot of maintenance.
Suffolk Building Society Mortgage Manager Charlotte Grimshaw said: ‘The pandemic has helped many of us rediscover what the UK has to offer, and that of course also has a positive impact on the environment.
“Instead of automatically flying off to warmer climes, environmentally conscious holidaymakers are realizing they can enjoy many destinations across the UK while minimizing their carbon footprint and supporting domestic tourism. at the same time.”
But Grimshaw was keen to emphasize that buying a home was not a decision to be taken lightly.
She urged potential buyers not to get carried away with their emotions and to carefully consider the financial aspects of investing in a vacation property.
This is especially important for those considering buying with a mortgage, as getting a loan for a vacation rental can be more difficult than getting one on a property to live in.
“Prospective owners would do well not to get carried away with the spirit of the holidays, because the purchase must also accumulate financially – especially for those who need a mortgage on their holiday rental property. “, she said.
“Our advice to anyone considering this route would be to make sure you understand the criteria that mortgage lenders will be looking for, as this can be very different from a standard residential mortgage application, or even a standard buy-to-let property. mortgage.
It’s worth taking the time to understand the market and check out the competition before you fall in love with a property that isn’t viable in terms of rental.
Charlotte Grimshaw, Mortgage Manager, Suffolk Building Society
“Before jumping on the bandwagon, potential owners need to do their due diligence.
“Consider the financial commitments not only of purchase, but also of maintenance, taxes and other expenses such as cleaners and gardeners.
“It’s also worth taking the time to understand the market and check out the competition before falling in love with a property that isn’t viable in terms of rental.”
For those still hoping to find their dream vacation property, the building society has compiled a list of top tips when looking for a mortgage.
Getting a mortgage: 10 tips for vacation rental owners
Getting a mortgage approved for a vacation rental can be trickier than for a primary residence
1. Be aware that many vacation rental mortgages require a landlord to have a mortgage, own their primary residential property first, or have previously purchased to let properties – and in some cases a combination of these
2. Understand that some lenders also have age restrictions for new homeowners, even if they are already homeowners
3. Affordability ratings for vacation rental properties are usually calculated on the property’s rental potential rather than personal income and expenses, but the lender will still want to understand the applicant’s financial situation.
4. Applicants may be required to demonstrate a minimum income set by the lender, but this income can often come from a combination of employment, self-employment, investments, pensions, etc.
Buyers should check whether holiday park homes breach their lender’s terms and conditions
5. Be prepared to show a third party proof of low, mid and high season rental value from a verified letting agent – even if you don’t plan to use an agency to manage the property
6. Expect the property to be appraised by the mortgage lender as well. Properties in holiday parks, caravans or lodges, and those with an unusual method of construction may not always be accepted
7. Applicants should not assume that they can market their property on short-term rental sites such as Airbnb and Vrbo – some mortgage lenders have certain rules that prohibit this.
8. Check the amount of personal use allowed so you don’t violate the terms and conditions. Mortgage companies will always allow the owner a certain amount of personal use, but this may vary
9. Check if the mortgage lender has a limit on the number of vacation rented or purchased to rent properties the owner is allowed to own
10. Specialist holiday rental insurance should be taken out with third party liability cover (usually a minimum of £1m) included
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