Holiday lets could earn as much in a week as a normal rental property can earn in a month, according to experts from the Property Investor Show.
Research carried out for the show found that while 37% of investors consider city flats to be the profitable investment vehicle, and 23% saying student accommodation was most profitable, only 3% though holiday apartments would yield the highest returns.
Property Show exhibitor, Assetz, claims that investors buying a UK holiday apartment could benefit from capital growth of around 10% per year, low purchasing costs and rental yields as high as 10%. Assetz also says that holiday lets can earn as much in a week as a regular property would in a month, if let on a normal buy-to-let contract.
A professionally run holiday home can also benefit from tax advantages. Fully furnished homes which are available for let 140 days per year and are actually let for at least 70 days a year are classed as business assets. This means they attract ‘taper-relief’, which benefits from 10% capital gains tax after two years for upper rate tax payers, rather than the usual 40%. A normal buy-to-let property receives a capital gains to just 24% after a 10-year period.
Stuart Law, managing director of Assetz, comments: “Investors are missing a trick if they continue to shun the UK holiday let market. With an average net rental yield of at least 6% in the UK, this market presents a great opportunity for investors searching for above average yields.”
A Halifax survey of the best value seaside properties found that Great Yarmouth in East Anglia had the lowest prices, with some seaside apartments for as little as £142,860. Other great value holiday towns include Bexhill, Southend and Herne Bay, each of which have average prices of below £200,000.
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