Should you follow holiday let trends?

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While many people concentrate on the domestic buy to let market there is a blooming market in holiday lets. The one major drawback is that the vast majority of holiday lets are unlikely to be in demand for 12 months of the year – with potentially up to three months a year when they may be vacant or lacking in full occupancy. So, should you follow holiday let trends or just stick with what you have?

UK holiday let market

Even though a significant amount of focus is placed upon overseas markets and expats looking for places to rent in the likes of Spain, Portugal, etc there is a growing market in the UK for holiday lets. From the North of Scotland to the South England coast there are holiday destinations which are in great demand. This demand has led to a large increase in holiday let investments which has on occasion perhaps pushed local property prices out of the reach of first-time buyers.

This rise in prices has caused a backlash with a small group of councils in the South of England who decided to ban holiday let investment by outside investors. It is debatable as to whether this policy will be successful because it is okay protecting markets in the good times but who will pick up the slack in the bad times?

Premium pricing

The idea of switching your holiday let investments to take into account “long-term” trends is a very interesting one but is it as easy as it sounds? Trends in the UK holiday market can change extremely quickly and while you may be able to charge premiums in the more sought-after regions, are you better off taking a steady long-term approach?

You will also see that as a destination becomes popular this attracts more and more investors looking for premium rates of rental income. However, as competition increases you can in some circumstances see downward pressure on rental charges in what can sometimes become a race to the bottom. This is something you have to be aware of with regards to holiday let investments and rental rates because premium pricing can disappear as quickly as it emerged!

Cost of switching investments

If you do decide to follow the holiday let trend in the UK there are obvious costs associated with switching your assets and if you do this regularly then these costs can become significant. Other charges such as advertising, insurance and local authority charges could also vary widely across the country. While these charges may seem relatively small spread over a number of years, what happens if the latest trend is relatively short lived, do you then switch to the next one?

Conclusion

There will always be certain markets in the UK holiday let industry which attract premium rental rates for a relatively short or sometimes a longer period of time. The idea of switching to chase the latest premium rental trends sounds interesting in theory but in practice there are various additional costs you need to take into account. Sometimes it may be better to pick a popular long-term UK holiday destination and use your rental income wisely to expand your portfolio.

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