Previously, we shared insights from the Harpenden Building Society’s mortgage reports. These included “Industry Insight | Multigenerational Living Is On Rise ” and “Industry Insight Episode 2 | Challenges in the Mortgage Industry,” Our latest instalment, Industry Insight Episode 3, focuses on “The Potential of Annexes as Holiday Lets.”
The summer of 2020 was like no other. Many holidays were postponed, and quarantines were introduced and removed without warning. Additionally, travel insurance often offered little to no protection. Consequently, many people choose to holiday in the UK instead of travelling abroad.
This trend caught the attention of the property industry. With the global pandemic ongoing, there is hesitancy about overseas travel now and into 2021. As a result, the demand for UK holiday accommodation has surged. Harpenden Building Society has noticed a sharp increase in enquiries about holiday lets.
Independent properties remain popular. However, there is also renewed interest in primary residences with outbuildings or annexes. These can be used as holiday lets on the owner’s property. This trend highlights a significant shift in holiday preferences and property use.
Industry Insight Episode 3 | Increased demand for UK holiday accommodation
Earlier this year, we wrote about the sharp rise in inquiries for UK holiday accommodation. After months of lockdown, the prospect of a summer escape was foremost in many minds. Many people were reluctant to book travel abroad. Instead, bookings for UK holidays soared as the hospitality industry resumed in June. Popular holiday website Cottages.com reported record one-day sales, with bookings every 11 seconds.
Furthermore, the BBC reported that supply might not meet demand. Many self-catering properties left gaps between guest bookings for deep cleaning, reducing availability. This, along with more domestic travellers seeking longer-term options, significantly increased demand for the UK holiday-let market.
There is strong evidence suggesting this trend will continue into 2021 and beyond. Research by The Guardian shows holiday cottages and camping pitches are already booked for 2021. Holidaymakers are inspired to book ahead to avoid missing out.
Industry Insight Episode 3 will delve deeper into these trends.
Industry Insight Episode 3 | Using annexes and outbuildings as holiday lets
Managing second or multiple properties can deter some investors. However, at Harpenden, inquiries for primary residences with annexes are rising. These annexes are being let out as holiday lets.
We spoke to Charles Pears from Withiel, North Cornwall, to understand his perspective. He manages holiday accommodation on his property. “We moved to Cornwall for the lifestyle, beautiful countryside, beaches, and unique culture. These attractions also draw visitors. It was natural to provide holiday accommodation on a short-term basis. The benefits are numerous.”
Economically, they secure income from otherwise unoccupied spaces. This income covers the costs of maintaining high standards.
They meet interesting people socially. COVID-19 has changed their guest profile. Previously, most guests were from Europe. This year, with the rise in staycations, almost all guests have been British.
A complete lockdown at the start of the year led to a surplus of bookings later. They are now requiring gaps for deeper cleaning. It’s a good income. Tax is straightforward if you keep disciplined records. It is a simple extension to the usual self-assessment submission.
Industry Insight Episode 3 | Harpenden’s experience with holiday lets
We recently lent to a couple buying an 18th-century Georgian manor house. It sits on 30 acres of farmland, orchards, and woodland. The estate includes a three-bedroom coach house with a games room, office, and courtyard. The couple planned to rent it out for £20,000 per annum.
Since most of the property was for their primary residence, it qualified as a residential mortgage. Many lenders reject properties partially used as holiday lets. However, Harpenden manually underwrites all applications. We work flexibly and collaboratively with brokers to find solutions for complex applications.
Not every property offers such exclusive holiday cottages. At Harpenden Building Society, we see properties with converted cellars, barns, or former granny flats into short-term lets. The additional unit can be attached or detached within the property’s grounds. Remember, the main house must be at least 50% of the total footprint.
Opportunities in the Holiday let Market
The staycation trend will likely continue into 2021, presenting prime opportunities in the holiday lets market. Annexes attached to primary residences offer extra income without managing a separate property. Specialist lenders can review unique circumstances and find a solution for everyone involved.
This market trend shows promising potential for homeowners. Converting parts of their property into short-term lets can be profitable. Expert lenders can help navigate the complexities of such applications.
Overall, properties with holiday lets require careful consideration. They can provide significant benefits and additional income streams. Engaging with a flexible and understanding lender is crucial for success.
Thank you for reading our publication on “Industry Insight Episode 3 | Annexes as Holiday Lets.” Stay “Connect“-ed for more updates soon!
