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Buying a Holiday Home for Extra Income

A beginner's guide

By Georgina Avatar

Guide to Buying a Holiday Home

I, myself, do not know anything about buying a holiday home to let or where the best place would be for maximum letting potential so I have decided to do the research and write this guide to help you decide on your best options.

There are four simple questions you need to ask yourself: Where would you see yourself re-visiting time & time again? Do you know all of the costs involved? Which holiday home do you see yourself in? and last but not least Have you visited the area/park before making your final decision?

Whether you are looking at buying a caravan holiday home for yourself to use, to rent out and share with others who do not have the luxury of owning their own holiday home or simply for financial purposes and renting out then location will probably your top priority in any case.

Buying a caravan or holiday home can be a daunting process for your first time but it can be a great investment, the first thing to think about is who you intend to be your preferred market or where you like to be yourself i.e., somewhere for seaside lovers, a secluded woodland location for walkers or somewhere more romantic for couples the answer will narrow down on where to purchase your holiday home.

Holiday Home Finance, Tax & Costs

Owning a holiday home can be complicated on the financial aspect and depends on what you plan to do with the property, there are fewer complications if you wish to keep it for your own pleasure, but you can get plenty of help and advice if you wish to run the home as a business.

  • There is the possibility of getting a mortgage on a holiday home. If you don't plan on letting the property out (or only on occasion) then a second home mortgage may be the best solution for you, but bear in mind you may need a large deposit - known to be of 35%.
  • If your holiday home journey takes you abroad you can look in to getting a loan from a UK bank or a local lender but be sure to read reviews and do checks on the lender first. Take extra care over hidden costs and consider asking a professional to help you with the process.
  • You may need to go to a specialised building society, as some high street banks do not offer holiday home mortgages. Many lenders will expect to see proof that you can make a gross income of 125-130% of your mortgage payment, so it's worth doing research on the local area and letting market.
  • There are the usual council tax and stamp duty but holiday homes are also subject to capital gains tax, you may be able to get some tax relief on holiday rental properties.

If you are considering renting out your holiday home then this may lead to extra maintenance costs, but this could result in a win-win situation if the rental income covers the overall costs and a bit extra. If you would rather not handle the management and outsource to an agency then you will need to factor in these costs.

Letting agent costs can vary depending on where your holiday home is, but it can be up to 25% from each rental. You may find that this large chunk of your income is worthwhile with the convenience and hopefully a guaranteed good service and it frees up your time.

You should also consider the cost of keeping your holiday home clean & tidy after each stay, if you don't live close then you will need to look in to employing someone else to do the job for you.

Secrets of letting your property

If you decide to let your holiday home then making your property pet friendly you can attract a much wider customer base. On average pet friendly properties sell +2.5 more booking weeks than those who don't accept them.

Providing maps, tourist guides and things to do on rainy days can help your first time visitors to the region.

Choose the right places to promote your property outside of the area to ensure you maximise your bookings. Be aware of scams and scam artists, ask the companies that you advertise with to watermark your photographs for you.

Which Holiday Home to Buy?

Buying a holiday home can have advantages and disadvantages, this can also depend on which holiday home you wish to buy. There are a number of options to choose form i.e. holiday caravan, lodge, chalet, cottage, house, flat/apartment or even a boat! So, what will you choose? I will do what I can to find the pros and cons of each one for you.

Holiday Caravan

There are three types of caravans to choose from, static, touring and motorhome. Picking which one suits you is part of the excitement in owning a holiday home.

Pros Cons
Plenty of room to manoeuvre and not squeeze around each other. Can't be moved to different locations without a lot of costs.
No need to find storage when not in use. Annual site fees and maintenance costs.
Doesn't need to be towed. May not be able to use during winter months if you wanted.
No extra fuel costs because of extra weight.
No need to unpack and pack each time you want to get away.
More likely chance of getting to know your neighbours and making new friends.

A static caravan stays on the same pitch all year round and isn't easily towed, hence static caravan. As it doesn't move from place to place, they are much wider and longer than a touring caravan, which allows much for a larger toilet, shower, bedrooms and living space. Willerby have a great range of high quality holiday caravans for sale.

Touring Caravan

Pros Cons
Can easily tow your caravan to visit different locations each time you go away. Requires a suitable car to tow the caravan.
Can be cheaper to buy than a static. May need to take another test to be able to tow your caravan.
Much lower maintenance and storage costs. More fuel costs to accommodate the extra weight.
Towing can be tricky to master.

Touring caravans are smaller than static caravans, this means lack of space. But having a touring caravan means you can book a last minute pitch and set off on your next adventure.

Don't forget to check you have everything you need before buying a tourer, for example a vehicle suitable to tow a caravan and that you don't need to take another test to be able to tow. I would also advise that you practice towing a caravan if it is your first time as it can be tricky to master.


Pros Cons
Very mobile Less storage & living space.
No towing needed. More expensive than a static or a tourer.
Convenient way to holiday. Motorhome insurance required.
No need to change your vehicle. Driving your home when you want to go out.
Less likely to rent out.

Motorhomes are a car and touring caravan mixed in to one vehicle. You just jump in and drive. One downside to this is that you will be driving your accommodation around if you wish to venture out to any distance away from the campsite.

When it comes to motorhomes, they are much steeper than both static and touring caravans. A newer motorhome is known to sit at around the £50,000 mark, time to get saving.

Motorhomes have more of a substantial fuel cost to consider as motorhomes guzzle fuel far more quickly than cars. They are also classed as vehicles so you are legally required to get insurance.

Luxury Lodge or Chalet

Everyone dreams of buying a holiday lodge or chalet to spend quality time with family and friends, but there are things that you need to consider before investing in such a big expense. It may be the wrong choice for you, this could be for a number of reasons i.e., budget, maintenance costs etc.

Pros Cons
Easy getaway. Inflated prices.
Plenty of storage and living space. Obtaining a mortgage.
Highly sought after. Damage from guests.
Hold their value. Holiday home insurance.
Easily to let out.
Favourable tax laws.

Buying a lodge or second home attracts many people to give them the ability to just go on holiday or have a beak as and when they need it.

If your holiday home is family friendly and located in a desirable spot, many people are willing to pay premium prices to hire your property. You will need to weigh up how often you will want to use your lodge yourself and when it will be available for you to let it out, bear in mind that there are quiet spots during the year.

You may be looking to let your holiday caravan or lodge just to help you with the costs of maintenance and ground rent. Finding the right place to help you get your lodge seen and rented is most of the work done. Holiday lets are subject to more favourable tax laws because they are seen as a trading venture rather than an investment.

Buying a property in sought after area, such as Cornwall, will often mean paying 'over the odds' for your lodge. But this can mean that making a profit on your holiday home quicker than of you buy one in a 'less desirable' area. Haven website has some nice examples of Luxury lodges for sale

You need to keep in mind the damage and disruption that letting your holiday home can cause, even though you go out of your way to make sure you are renting out to the right people, sometimes they can be disrespectful of your property or sometimes accidents just happen.

Cottage, House or Apartment

As a second-home owner, all the financial responsibilities fall on your shoulders. You also have to consider the doubled everyday expenses as well like:

  • Second mortgage payments
  • Homeowners insurance
  • Property taxes
  • Utilities
  • Upkeep
  • Travel costs of getting to your second home
  • ental management fees

Renting out your second home can help subsidise your expenses, however you need to make sure you have everything in place to be able to rent, correct insurance, laws to rent your home in the place you have bought it. If you have bought a second home some distance away from your primary residence then you may want to look in to cleaning services (if renting out) and general maintenance.

Buy a new or used caravan

Once you have chosen which caravan is best for you, then the next step is browsing the market. Of course, buying a brand new caravan will be considerably more expensive, than their pre-owned counterparts.

Used caravans will more than likely have a bit of wear and tear, so you need to be careful as you could end up spending more on repairs than what your caravan is worth. We also have a caravans for sale section that may be of use.

Second-hand caravans: What to look out for

There are a few things to look out for if you are buying a second-hand caravan:

  • Tyres: Tyres can be expensive to replace, older caravans have probably done plenty of miles. Check for cracks, scuffs and flat spots. Tyres more than five years old will need replacing. If you spot them before agreeing on a deal, you could get them replaced without being out of pocket.
  • Service history: The more documents your home comes with the better, leaves you less likely to be caught off guard by any future issues. Ask for receipts and evidence of servicing before shaking hands.
  • VIN: Vehicle Identification Number, manufacturers after 1992 recorded caravans on the Caravan Registration & Identification Scheme (CRiS) database with a VIN. The registered keeper should have this number to hand, so be on your guard if they can't provide you with this.
  • Windows & Doors: Make sure catches and locks are all working correctly, if not it could invalidate your insurance and become costly.

Where Do You See Yourself Re-Visiting Time & Time Again?

The most popular holiday destinations in the UK range from golden coastlines to rolling hillsides and everything in between.

Cornwall - The extreme southwestern peninsula of England, it has the longest stretch of continuous coastline in Britain and is one of the sunniest areas in the UK. With stunning picturesque villages, light blue waters, dramatic granite cliffs of Land's End, picture postcard harbours and beautiful architecture making this one of the most scenic areas of England.

Travelling to Cornwall can be achieved in many ways by train, car or coach and bus - GWR operate high speed train services. M4 motorway brings you from London, M6 from Manchester, M5 from Exeter or if you are travelling from Devon you have the scenic A39 Atlantic Highway running through Bude.

Devon - Mother Nature's Playground. Spend dreamy days exploring rolling countryside, stunning beaches and seaside resorts, ancient castles & historic castles. The Jurassic Coast is in the East of the country, you could try a bit of fossil hunting. North Devon has unparalleled coastal views and the wild beauty of Exmoor and Dartmoor, with plenty of waterways, quaint market towns, bustling cities, coastal resorts and rural retreats.

The county is easily accessible with it being well served by trains from all over the country and quite picturesque, the two main lines are the Paddington line and Waterloo line served by the Great Western & South Western Railway. The M5 runs into Exeter and has links with other major motorways including the M4.

Wales - Wales has four beautiful regions for you to explore, dramatic North Wales; rolling Mid Wales; the coastal West and the urban South all with something for you to explore.

North Wales is alive with action and a rich culture, find world heritage, one of Europe's oldest living languages, this is also the home of Snowdonia with towering mountains, fantastic beaches and lovely old towns.

South Wales home to Cardiff, the creative capital city. South Wales is a hub of sporting events and Welsh culture. Discover coastal hikes and the serenity of the Wye Valley.

Mid Wales known as the green heart of Wales with clear seas, bright harbours and hidden coves of the Ceredigion coastline, busy market towns and dramatic hill walks.

West Wales is a coastal and cultural region and is home to their second city, Swansea. Ancient legends inspire contemporary creativity and colourful seaside villages.

Scotland - Scotland is calling! The perfect location for beautiful landscapes, leafy cities and dark starry skies. Holidaying in Scotland can be an incredible experience filled with laughter, culture, history and magnificent landscapes. Walk along sandy shores, hike up towering Munros to see spectacular views, explore tranquil forests and experience vibrant festivals. A place you must visit is Loch Ness, shrouded in mystery, myths and legends, the loch is the UK's largest body of water and is around 700ft deep.

During the Autumn and winter seasons is the best time to witness the natural wonder that has fascinated mankind for a millennia, Aurora Borealis, the Northern Lights! Northern Scotland actually lies at the same latitude at Stavanger in Norway and Nunivak Island in Alaska which means you're in a good chance of spotting the 'Mirrie Dancers'. Wherever you are travelling from in the UK there are lots of travel options available with regular road, rail and ferry links to Scotland's stunning destinations.

Isle of Wight - Just a short ferry ride to the Solent will take you to this perfect little holiday haven. Pocket sized yet perfect, it is a hub of activity all year round, the Isle of Wight measures 23 miles by 13 miles and has a variety of picturesque villages and small towns. Why not hire a bike and discover picture postcard side of the island and be surrounded by greenery and quintessential English thatched cottages.

The Isle of Wight is one of the jewels in England's crown with fabulous coastal views, sand and surf beaches, Downs and woodland, there is something to offer for everyone. Whether you decide to travel by road or rail there are simple routes from Southampton, Portsmouth and Lymington, if you travel by road in your own car you can travel by motorway to the ferry ports. South Western Railway have train services from London Waterloo to Southampton, Portsmouth and Southsea, then pick up the Red Jet, Wightlink catamaran or Hovertravel hovercraft to get to the island.

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