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New research has revealed that a significant number of UK landlords are considering becoming holiday let landlords to earn additional income and increase the cash-flow from their rental properties, driven by the growing popularity of UK staycations. The ongoing chaos surrounding foreign travel, coupled with the weak pound and the prevailing cost-of-living crisis, has made the idea of vacationing in Britain more appealing to many tourists looking to get away this summer. Hospitality experts predict that the allure of British-based holidays, which soared during the COVID-19 pandemic as travel restrictions limited overseas trips, will continue throughout the year due to the current economic instability and financial pressures on households.
Investment opportunities
24% of Property Owners Consider UK Short-Term Lettings to Increase Cash-Flow
A survey conducted by specialist holiday let mortgage lender Together, with a sample of 2,000 UK adults, indicates that people are keen to capitalise on this sustained trend, with 24% considering becoming holiday let owners. Among 18 to 34-year-olds, this figure rises to an impressive 51%.
The primary motivation for potential holiday let landlords is the potential for cash-flow, with 48% stating that they would consider short-term holiday letting as a means of earning extra money. This aspect is even more important for individuals aged 55 and over, with 65% of them driven by the desire for an additional income stream.
The survey also identified other significant factors motivating property owners to venture into holiday letting. Maximising the use of their existing property was a priority for 28% of respondents, while 29% viewed it as a way to fund their retirement. Among older Brits, 37% cited retirement funding as their top reason for becoming hosts.
However, some potential landlords expressed concerns that deterred them from pursuing holiday letting. Approximately 22% believed they wouldn't qualify for a holiday let mortgage, while other barriers included the time investment required for setup and operation (28%) and renovating the property to a high standard to ensure a successful listing (21%).
Increase Cash Flow From Property Investment with Holiday Lettings
In a separate survey commissioned by Together, which included 100 holiday let owners who rent out their properties through platforms like Airbnb, additional income and convenience emerged as the most significant benefits of being a host. 63% cited the extra income, 35% highlighted the ability to maximize property assets, and 30% expressed the entrepreneurial satisfaction it brought.
Of the 88% who would recommend becoming an Airbnb host to others, 64% pointed to the additional income as the main reason, while 45% mentioned the possibility of passing on the holiday property in their will.
The release of these survey results precedes the upcoming half-term holidays, during which UK families, grappling with price inflation, will likely consider staying within the country rather than traveling abroad.
Marc Goldberg, Commercial CEO at Together, noted that many investors might see an opportunity in short-term holiday lets, which can yield higher returns than traditional long-term buy-to-let properties that usually involve six- or twelve-month contracts with tenants.
While long-term rentals provide investors with greater security, short-term holiday lets allow landlords to charge higher rates during peak seasons such as half-term, Christmas, and summer holidays.
Increase in Demand for UK Staycations
Goldberg emphasised the increasing demand for staycations and their foreseeable popularity. He also highlighted the current challenges in the traditional buy-to-let market, where rising mortgage costs are making it less appealing. As a result, more potential investors are turning to short-term lettings as a way to generate greater profits.
Goldberg concluded by advising individuals considering holiday letting to seek specialist lenders, as mainstream lenders may not always offer mortgage applications specifically tailored to holiday let properties. Consulting with such specialists could help turn aspiring hosts' ambitions into a reality.
Impact on Long-Term Rental Prices
The impact of the growing popularity of holiday letting on the UK housing crisis is complex and multifaceted. While holiday letting can provide additional income for property owners and contribute to the local tourism economy, it can also have implications for the availability and affordability of housing in certain areas.
The increase in UK property investors who opt for holiday letting choose to remove their properties from the long-term rental market, reducing the availability of homes for individuals seeking permanent housing. This can exacerbate the existing shortage of affordable rental properties, particularly in popular tourist destinations or areas with high demand for short-term stays and drive up long-term rental prices as there is a supply and demand imbalance.
Impact on Property Prices
There will also be an impact on property prices as has been evidenced in popular UK tourist destinations. In areas with strong demand for holiday accommodation, the increased popularity of holiday letting can drive up property prices as there are less properties available for sale and increased demand from buy-to-let investors.
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Henley Capital have a range of affordable properties in highly desirable UK staycation locations, with rental yields of up to 10% NET. Speak with one of our property experts today to find out how we can help with your UK holiday let investment.
