So you are looking for a holiday let mortgage. But are you sure you know exactly what a holiday let means?
This may seem a silly question. But there's a lot of confusion between ""holiday lets"" and ""buy-to-lets"", and between ""holiday lets"" and ""holiday homes"". Getting a holiday let mortgage is quite different from getting a mortgage on either a holiday home or a buy-to-let. So what are the differences?
A holiday home is a second home which you buy for your own use or the use of your family and friends, while a holiday let is a property you buy to let out commercially as a business. A holiday let is quite different from a buy-to-let property, which is let out for residential use and is regarded as an investment, not as a business.
So if you are looking for a holiday let mortgage , how can you be sure your property can be defined as a holiday let?
The Inland Revenue is quite clear as to what makes your property a holiday let. This is a Good Thing, because there are a lot of tax advantages in being treated as a business not an investment.
To count as a holiday let as far as the Inland Revenue is concerned: * The property must be in the UK. * It must be available for letting for at least 20 weeks (140 days) in a year. Remember this is the minimum as far as the taxman is concerned. If you use a lettings agency, some demand a much higher availability than this - some as much as 50 weeks in the year! * It must achieve an actual letting rate of 10 weeks (70 days) in the year. This must be at the commercial rate, not at a reduced or non-profit rate for family and friends. * It must not be let to one single occupier or group for more than 31 days in a seven-month period, although it can be during the remaining five months of the year. * The property has to be fully furnished.
If you're sure your property qualifies, you can then start looking for the right kind of mortgage. A holiday let mortgage is a bit harder to arrange than a standard buy-to-let mortgage and not all lenders want to know. However, there are some who will be happy to consider it. If you talk to a good Independent Financial Adviser or independent mortgage broker, they will point you in the right direction for your holiday let mortgage.
About the author: Sean Horton is a Director of
Holiday Let Mortgages who offer expert advice on holiday let and holiday home mortgages and finance.
1 comment:
There are several reasons why we believe investing in buy to let market is, has been, and always will be as good a place for your money as there is out there! Firstly, the worldwide housing market is limited in supply and the population is ever-increasing at an exponential rate. This is true with most local markets as well as demand for housing continues to outstrip supply, pushing prices up and causing cities to expand. Simple supply and demand tells us that as demand grows faster than supply, prices must rise! Of course, investing in the right market and at the right time are integral to your success in property investment. Not all markets are rising, or have good rental returns; but if you are able to find the ones that are, you will do very well in the world of property investment!
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