Buyers and renters seek holiday lets amid the decline in global travel

The outbreak of Covid-19 has, for the time being, transformed the way we think about holidays.

Overseas travel has declined substantially, whether it be due to restrictions or concerns for safety, and global airlines believe it will take until at least 2024 for passenger numbers to return to pre-crisis levels.

Increasingly UK travellers are turning to domestic holidays, with reports of surges in bookings for cottages and campsites. Many plan to continue taking holidays within the UK once the crisis subsides and economies reopen.

This is already having an effect on the housing market. The number of offers accepted on homes in Knight Frank’s central region, which includes the Cotswolds, were up 89% in the week ended August 1st compared to the five-year average, at least in part due to prospective buyers seeking second homes and holiday lets.

The data suggests this could be a sensible investment, if you choose the right property. Mortgage payments on holiday lets are 100% tax deductible, and with interest rates likely to remain at or close to record lows for the foreseeable, returns can be attractive compared to many other assets classes.

The mortgage market is currently extremely busy as borrowers seek to lock in cheap deals. Holiday let mortgages tend to be straight forward to arrange, and are largely approved based on the rent a property can attract, so it’s worth taking expert advice before you buy.

We’re currently seeing particular interest from older homeowners that have built up substantial equity in their primary residences during the past three decades and beyond. Innovative Equity Release products now make it possible to access some of those funds in order to invest in a second property which can be let out for holiday lettings.

If you’d like to discuss financing the purchase of a holiday letting, or would simply like an informal conversation to assess your finances, we have expert advisors on hand to act as guides.