Is Buying a Holiday Home a Good Investment?

Is Buying a Holiday Home a Good Investment

What is a Furnished Holiday Let?

With the alternative investment game booming in 2019, furnished holiday lets (FHL) have a special place in the market. Investors have begun to look at alternative property, more specifically holiday homes, as their next big investment. With this lucrative investment, investors are able to benefit from considerable tax advantages maximising returns on their investments.

A furnished holiday let is a specific classification of rental property within the United Kingdom, Ireland and other European countries. The space for FHLs within the real estate market was created to encourage investment and revitalisation of the UK’s holiday hotspots, thus providing investors with profitable tax advantages. The ‘staycation’ spend in 2017 was calculated to approximately £23 billion, proving the massive demand for such properties. Here’s why you should consider investing in furnished holiday lets as your next best investment.

 

Benefits of Furnished Holiday Lets:

  • Growing market with an increasing demand. Holiday Homes are a massively growing market, especially with the increased summer temperatures in the UK which make the United Kingdom a popular hotspot for vacation.
  • After BREXIT, FHL owners will benefit massively. To start, housing prices are likely to increase, meaning that the prices for holiday homes will also increase significantly over the next 5-10 years creating room for sizeable profit. Furthermore, with the GBP depreciating, the UK is expected to have an even bigger surge of interest as a go-to holiday destination from those travelling from abroad.
  • Excellent alternative for a pension-scheme.
  • The social climate has had a considerable effect on the number of Brits travelling abroad; with terrorism and changing politics the UK has seen a rise in the number of staycations.
  • Another obvious but massive benefit of investing in a furnished holiday home is that as well as making a sizeable profit, owners are also able to enjoy a second home during the time that the property is not being let.

 

Tax Benefits of Furnished Holiday Lets

  • Capital Gains Tax Relief: Normally, the CGT rates for standard buy-to-let properties fall at 18% or 28%, payable on selling the property and depending on the income of the property owner. As FHLs are categorised as a trading business, owners of FHLs are able to claim CGT entrepreneurs’ relief. With claiming entrepreneurs’ relief, the CGT is payable to a 10% flat rate as a result.
  • Income Tax Relief: Considering that FHL are treated as a trading business, holiday home owners are eligible to claim machinery and plant capital allowances for equipment for the property such as furniture. Moreover, any profit/loss against income tax pay can be claimed, unless the profit from the holiday home takes you over the threshold. This means that any profits made can be contributed towards pensions.
  • Council Tax Exemption: This investment benefits from Business Rate property tax. This means that FHL owners are essentially able to claim Small Business Rate Relief of up to 100% dependant on location.

 

Invest with HyLife

Holiday homes with HyLife are in partnership with one of the UK’s most renowned resort operators. All properties are fully functional and the resort is expanding meaning investors run no development risks nor costs. The property and ongoing letting is managed by the resort operator offering a hassle-free lifestyle investment with regular quarterly income payments. Get in touch to find out how to invest in a holiday home.

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