TheMoveChannel.com | International Property

Browse By Subject

Money

Property

Social

Professional

BTL investors 'missing out'

16/08/2007

Buy-to-let investors are overlooking UK holiday lets as potential investment opportunities, and investors that continue to ignore this market are losing out, reveal experts at the Property Investor Show (21-23 September at ExCel, London)...

A survey carried out by the Show reveals that just 3% consider holiday apartments as the most profitable investment vehicle, compared to more traditional property assets, such as a city flats (37%) and student accommodations (23%)

However, Property Investor Show exhibitor, Assetz, reveals that UK investors could benefit from strong capital growth of around 10% per year, as well as benefiting from low purchasing costs and gross rental yields of nearly 10%, if they choose to put their money into onshore holiday homes.

Seaside resorts popular

Holiday lets, particularly in British seaside towns, can earn as much in a week as the property could achieve in a month, if let on a normal buy-to-let contract.

Properties in popular holiday seaside resorts such as Great Yarmouth, in East Anglia, which was recently listed as one of the 20 best value for money resorts, can be purchased for as little as little as £142,860. The three seaside towns in the South East; Bexhill, Southend and Herne Bay all have average house prices below £200,000.

Professionally run holiday homes in the UK also benefit from tax advantages; as long as they are available for let 140 days per year, let for at least 70 of those and are fully furnished, they are classed as commercial business assets.

Global opportunity

Therefore, they attract business asset 'taper-relief', which means an upper rate taxpayer pays capital gains of just 10% on the uplift in value after a two-year period rather than 40%. This compares to buy-to-let investors who benefit only from a capital gains reduction to 24% after a ten-year period.

Stuart Law, Managing Director of Assetz, who will be presenting a seminar on UK holiday lets at the Show said: “The UK is growing in popularity as a holiday destination for both UK residents and overseas visitors. Investors are missing a trick if they continue to shun the UK holiday let market.

With an average net rental yield of at least 6% in the UK, this market presents a great opportunity for investors searching for above average yields. In addition, investors can benefit from the excellent tax advantages and even use the property during the void periods for their own holidays.

If a property is located in a popular tourist area it is highly likely it will produce a greater annual income than a buy-to-let property, despite having potentially much longer void periods.”