So, you are thinking of setting up a holiday let business? Today’s blog is all about the key issues that you will need to consider including mortgages, location and health & safety.
Location
One of the most crucial decisions you’ll have to make when setting up a holiday let business is where to locate your vacation rental. The location of your house is one of the most critical elements in determining how much money you’ll make from holiday rental, so think about it carefully. If you plan to buy a home with the purpose of renting it out for a living, you must consider this while determining where to put it. Don’t only pick a location that appeals to you; consider your guests’ needs as well. Choosing a location within a fair distance of a big town or city will greatly expand your prospective customer market, as individuals seeking for a weekend getaway will not want to spend too much time travelling.
Health and Safety
As a holiday homeowner, managing health and safety correctly is critical not just for your guests’ safety, but also to limit your liability in the event of an accident. Having a compliant and safe environment for your holiday rental will allow you and your guests to rest, knowing that any concerns have been addressed.
You owe it to your guests to do a complete risk assessment of the entire property and its surroundings, and then take reasonable efforts to mitigate any risks or hazards. It’s also a good idea to have a guest information file with instructions on how to use appliances and facilities properly. To identify any potential threats, do a fire risk assessment, install a smoke alarm on each floor used as living space, and ensure that all upholstered furniture meets current fire resistance standards.
Mortgage
It’s critical that you secure the correct mortgage for your vacation rental, as utilising a residential, second home, or buy-to-let mortgage for a furnished vacation rental could be a breach of contract with the lender, something you should never do. A respectable deposit, bigger than that required for a residential mortgage, is required to acquire a vacation lease mortgage. In general, you should budget for a 25% down payment, as well as higher interest rates and costs than with traditional mortgages. It’s critical to holiday let mortgage providers that your property is deemed secure enough to lend on. Fundamentally, lenders want to establish that the property in question is a conventional, residential property that may be sold on the open market without difficulty if the borrower defaults on their payments.
Air BnB or Vrbo or Booking.com?
Airbnb is distinguished by its integrated guest rating system. The host can submit a review and assign a star rating once a visitor completes a reservation. Every host’s star rating is added together to create an overall rating that is displayed on their profile. This is highly beneficial to hosts since it allows them to evaluate previous evaluations before taking a reservation. They can keep track of any remarks about the guest’s behaviour on Airbnb as well as their booking history. The star grade also indicates how easy or difficult it will be to host them. In comparison to Vrbo, Airbnb has lower listing fees.
Holiday Let Regulations
A property must be furnished and available for letting for at least 210 days per year to qualify as a holiday let. That implies you can use it for up to 22 weeks on your own. When you’re staying at the property, don’t count any days. During your stay, HMRC does not consider the property to be available for letting.
The property must be commercially let for at least 105 days per year to qualify for the favourable ‘furnished holiday let’ tax status. Because this is not a business let, don’t count any days when you rent the property to friends or family for free or at a reduced fee.
A single let cannot last longer than 31 days in a row. If that’s the case, you’ll need a written lease agreement that gives your visitor the same rights and duties as a buy-to-let renter. It could also have an impact on your tax situation, and you could be breaking the terms of your mortgage.
Guests staying in a vacation home have no right to stay and must vacate the property at the end of their stay.
A particular Hotel and Mobile Televisions Licence is required if you supply a television.
If you enjoyed this article on Setting up a Holiday Let Business you might also like to read about Running a holiday let.
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