02/08/2021
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Advice: Buying a holiday home for investment

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A holiday home is a sound investment in enriching your leisure time, but have you thought of buying one for monetary investment? Many parks allow you to let your holiday home - and some parks have systems in place specifically to help you achieve a substantial return on your investment. Owner-rental possibilities need to be explored on an individual park basis.

So, if you fancy buying a holiday home that you can use when your free time allows, and let it make money for you when you can't use it, there are lots of options out there.

Guide Contents


Which holiday home layout to choose?

Centre lounge layout

(Photo courtesy of Richard Chapman)

If you are looking to buy for investment, that will have a bearing on the layout of the home you choose. Those with three bedrooms are clearly more versatile and have wider appeal. There's something else to consider about bedrooms: the width of single beds. Some holiday homes have twin beds that are narrower than standard domestic single bed size, and so are only ideal for children.

Lots of lounge seating is key. So is a sizeable kitchen with plenty of work surface. And, in general, the higher the level of equipment, the more you can charge for the rent; we're talking about dishwashers and washing machines, in particular. A centre-lounge layout can be ideal for rental; these homes have bedrooms at each end.

You can also consider going for the super-luxury hot tub holiday market. There are lodges designed for a hot tub to be sunken into decking extending from one corner of the home. Perfect luxury for you and a great enticement in terms of rent potential. If you decide to go for a hot tub, it's wise that you choose a park that offers the service to empty and refill it between renting and also has the expertise to check and maintain water additive levels as part of the rental scheme service. There will be a cost attached to this, of course, as with all park rental services, so the costs will have a bearing on what you charge for rent.


How much rent to charge?

Hot tub in sunken decking

(Photo courtesy of Prestige)

The amount you can charge for rent depends not just on the unit you buy, but on the park, its location and its facilities. It stands to reason that you can charge a higher fee on a park stacked with family facilities close to a coast than on a park in a remote location with minimal facilities. Parks with rental systems in place will guide you on suitable figures. Remember to add on the cost of the park's rental services, if applicable. Or, if you decide to take on that responsibility yourself, you need to cost in an amount for fuel to get you to and from the park on a regular basis and cleaning materials, for example.


Should I allow guests with dogs?

If you don't allow dogs, you may be missing out on potential business. On the other hand, if you do, you may have extra cleaning to do, either yourself or as part of the park's service. Also bear in mind that, while there are many rental clients who look for holiday homes allowing dogs, and find it difficult because pets are seldom permitted, there are also clients who specifically don't want to rent a holiday home in which dogs have been, because they may have allergies associated with pet hair.


Insurance

You'd arrange insurance for your holiday home even if you're not renting it out. But you will need to check that the insurance you arrange covers you for renting. Having the right insurance in place is vital for protecting your investment and for peace of mind. Not least, it covers you for accidental or malicious damage caused by guests. The public liability element of your insurance also protects both you and your guests in case of accidents or injury while staying in the holiday home.

Read our full feature on insurance  


The legal stuff and rental pricing advice

A park holiday home logder

(Photo courtesy of Prestige)

You will need a gas safety certificate and you will need to get this updated each year. The certificate must be displayed inside the holiday home. Electrical appliances, such as a kettle, toaster, table lamp and television, will need an annual portable appliance test (PAT). Both a smoke alarm and a carbon monoxide detector are mandatory, too, as is a fire extinguisher. Your holiday home's electrical wiring system will need to be tested every three years to receive a fixed electrical installation certificate.

When calculating the rent to charge, allow amounts for gas and electricity use while rented, plus an amount for general wear and tear. Also conduct research in your local area. The best starting point would be to compare prices online with large holiday park operators in your area. Make sure you check low season costs during the winter months and the peak season costs during the summer months, as well as periods when children are on school holidays. Try to keep your pricing fair and try not to undercut your local competition. Another idea is to invite offers during quieter periods of the year.


Rental options

Facilities offered by parks that are geared up for owner-rental enterprise sometimes include guaranteed revenue ahead of bookings, managing the bookings, plus dealing with changeover days and laundry. Or, on some parks, you can go it alone and do all of that yourself. In so doing, you'll, of course, save money because you won't have to pay the fee involved for the park's rental services. But if you decide on the go-it-alone route, you need to be sure you are happy about all the cleaning commitments that are involved. And it's really only practical if you live reasonably close to the park.

If you're not going with a park's rental management system, you may be interested in the service offered by companies like Devon-based Holiday Caravans Direct. The company lists your holiday home on its website, charges 3% commission on bookings, and carries out ID checks to verify that the person booking is genuine.


HOLIDAY PARKS WITH LETTING SYSTEMS IN PLACE

sun haven holiday homes

(Photo courtesy of Sun Haven)

Sun Haven Holiday Park

Owned by Lovat Parks, this park is a mile from the north Cornish coast, a few minutes' drive, or a 20-minute woodland walk, from Mawgan Porth Beach. A short distance along the coast is magnificent Watergate Bay. Outside the reception office and shop is a 'Canine Staycation Station'. Dog biscuits and poop bags are there for dog owners to help themselves. There are two herb gardens and a firepit in a secluded little area, equipped with rustic seating, near to the Potting Shed coffee shop, with quaint, natural character.

A new development with valley views is for 19 lodges, all of which can be purchased to rent out. Another 20 are planned. All holiday homes at Sun Haven have a 50-year licence. The price of twin lodges will be around £250,000. The ground rent is £4,295. Four lodges, in various price ranges, are here already. Owners can choose to handle all of the rental arrangements themselves, or alternatively, Sun Haven can put them in touch with a company that will take care of changeover, cleaning, admin and more.


Boutique Resorts

Boutique Resorts owns two parks in Wales; Fishguard Bay Resort, on the west coast in Pembrokeshire, and Maesmawr Farm Resort, in Montgomeryshire, mid Wales. Both offer a fully managed letting scheme. Whether you're simply looking to cover your running costs from a few rentals, or generate a monthly income, these parks offer enticing opportunities. Prices of lodges are in three bands: Bijou, starting at £110,995, Premium, starting at £162,995 and Superior, starting at £195,995. Boutique Resorts tells us that an 8-10% return on investment can be expected for “serious subletters” - that's for buyers looking to generate income rather than simply cover costs. The parks offer a fully managed letting scheme that includes marketing, bookings and payments, and maintenance call-outs. Annual income examples range from £8,483 to £19,019, depending on the band of lodge purchased.

Maesmawr Farm Resort extends over 27 acres, surrounded by hills and meadows, close to the River Severn, near to the village of Caersws that used to be the Roman capital of Wales. The area is great for mountain biking, fishing, clay pigeon shooting and, of course, walking. Examples of lodges available include The Norwood at £110,995, a Harrington at £179,995, a Lakewood Lodge at £113,995 and a Harleigh at £162,995.

Fishguard Bay Resort sits amid a spectacular land of cliffs, coves and beaches. Boat trips and coastal path walking are among attractions. This is an area stacked with intrigue and ancient history; the bluestones of Stonehenge came from the Preseli Hills in this area; Britain's smallest city, St Davids, is here, and the first Tudor king, Henry VII, was born at Pembroke Castle. Lodges for sale include a Willow at £370,000, a Plantation House at £255,995 and a Skylark at £262,995.

Maesmawr Farm Resort
fishguard holiday homes
 
(Photos courtesy of Boutique Resorts)


Park Holidays

Park Holidays, which has 30 parks across the south and east, has a Guaranteed Letting Income scheme in place. You agree the weeks that the holiday home is available and the scheme takes care of arrangements including cleaning. Your rental income is guaranteed even if your unit is not let for all of the weeks that you've specified. Park Holidays says that caravan holiday homes yield from £4,080 to £11,665 and luxury lodges from £5,940 to £13,605.


Aria Resorts

Aria Resorts has five parks in Cornwall and the Isle of Wight that operate a managed letting service. The service includes marketing and bookings, plus help in making sure your unit complies with all the legal regulations, and pays you the income from the rent quarterly. Aria Resorts' management fee is 30% of the rental income, plus a charge for linen and cleaning.


In need of more information?

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