With Suffolk’s Tourism industry worth an estimated £2 billion, there is a huge opportunity to generate an income from the self-catering holiday let market.
As with any investment, the key is to do your homework.
This advice for those new to the holiday letting industry comes from 16 years of accumulated knowledge by Best of Suffolk, a leading agency in the area. It sets out how to make sure your property purchase results in maximum return on investment, points out potential pitfalls and rookie mistakes to avoid.
Is the property suitable for holiday letting?
It is surprising how wide the range of potentially successful holiday properties is, they certainly do not have to be on the coast or have magnificent views, but do need to offer future guests a memorable stay. However, away from the ‘hotspots’ of Aldeburgh and Southwold, a property may have to work a little harder to attract guests, with strong theming, interior design and features enabling the property to be the ‘destination’, as well as the ‘accommodation’
If in a rural area consider the USP (unique selling point) of the property? What’s the “Wow-Factor”? Often these can be added during the all-important furnishing and fit-out phase.
Then you’ll need to think about facilities that can’t necessarily be added post-purchase, such as parking, outdoor space and sea views. These amenities can add significant value to the figure you can achieve weekly for holiday letting, as well as enhance desirability.
Know your market
What kind of market does your property appeal to? Family friendly? Romantic getaway? Luxury? Dog friendly? Once you’ve identified the key market for your property, you’ll need to budget to ensure the property is finished with that market in mind. For example, dog friendly will mean hard-wearing floor coverings. Luxury may need designer kitchen appliances, recognised brands or hot tubs. Finishing your property according to the needs of the market will ensure bookings are maximized.
Not sure what suits your property best? That’s when you should enlist a local holiday letting agency specialist. They will ensure you secure the maximum return on investment for your property, as well as identifying your target market and suggested rental incomes.
It’s also worth checking your competition. How many other properties are similar to yours? How many properties have availability in peak season and out of season? A saturated market will mean increased competition, and potentially periods where your property will be unoccupied, affecting your income.
Make sure the figures stack up
Once you’ve agreed costs of purchase, restoration or updating and to fully equip your property in accordance with industry regulations, you will need to ensure the figure you can realistically achieve over a 12 month period will cover your costs.
In addition to deciding low, mid and high season prices, you will also need to know average occupancy rates for your type of property in each period to generate an annual income figure. Given the seasonality of the industry, it is likely that income secured for the peak weeks will need to cover out of season periods when occupancy will be lower.
Ongoing costs to bear in mind
In addition to ongoing maintenance costs (broken toilet seats, gardening costs, window cleaning etc) you will need to budget for a house keeper and laundry fees for washing and ironing of linens.
Ensure you’re fulfilling your holiday letting landlord’s duties
As a holiday letting investor, there are a number of regulations you are legally required to comply with. These range from fire safety and associated tests needed, to correct insurance and minimum equipment required. Whilst you can research this on the gov.uk website, a specialist letting agency can arrange all of this on your behalf, including coordinating the tests and annual re-testing.
How are you going to manage and market your property?
Great news! You’ve followed our advice to the letter and your property is now ready to be let. So what happens now? Managing a holiday let is time consuming and can have catastrophic effects if done poorly. Responsiveness to enquiries is key in this highly competitive industry, and negative reviews can mean your property has a bad reputation. You’ll need to decide if property management is something you can realistically achieve.
What’s more, selecting the right platform or agency to market your property is key. Some of the online travel agents allow you to manage your bookings yourself, which can keep commission costs down. Something to bear in mind at this point is that cheapest is not always best. Which agency will secure the optimum number of bookings over a 12 month period (not just the peak weeks) for the highest return?
After significant investment, management, marketing and bookings are essential to maximize return. Whilst this might seem overwhelming, the potential return is worth the research, time and due diligence needed to produce a product that will sell well. But fear not, there is a wealth of expertise out there to help guide your every step to becoming a successful holiday let landlord!
Guest post supplied by Best of Suffolk
At Ipswich Building Society we offer free mortgage advice through our team of professional, qualified mortgage consultants.
Visit our Holiday Let mortgage product page to find out how we could help with your holiday let purchase or remortgage, or for a no-obligation chat about your circumstances or to see what we may be able to offer you, give us a call on 0330 123 0773.