Holiday lets are the highest returning asset within the UK real estate sector according to holiday property fund, Second Estates.
This is mainly the result of their higher yields which were 1.1% higher than those for residential buy to let properties over the past 12 months and higher than all other major categories.
The lettings data shows holiday lets generated an average gross yield of 9.4% over the last 12 months and a net yield of 6.1% after the deduction of running costs such as cleaning, furnishing, booking fees and property maintenance. The next highest asset class was student accommodation with a net yield of 5.25%
Data from Second Estates shows that the average holiday property generates a weekly income of £563 across the whole year, significantly higher than the average weekly rent for a residential buy to let at £191. Even when taking into account the cheaper off-season weeks, holiday lets generate nearly three times more income than residential buy to let properties. Once running costs are accounted for the level of net income is higher than for buy to let properties providing an attractive investment proposition.
The total returns from holiday lets are forecast to outperform similar property asset classes over the next five years, achieving an average annual total return of 9.3% versus 6.1% for the UK buy to let sector.
This forecast performance is backed by the strength of UK tourism in recent years with increasing numbers of visitors to the UK and the popularity of staycations. The UK experienced a 7% increase in overseas visitors in 2017, as well as an increase of 11% in tourism spend which is having a positive impact on UK holiday accommodation. By contrast, the buy to let market has seen a wobbly 18 months due to regulatory changes which are limiting landlord profits.
For those interested in investing in buy to holiday let, the news that over a quarter of Welsh people plan to visit Pembrokeshire this year as their favourite staycation spot is worth noting. In recent years Pembrokeshire has become “the new Cornwall” offering holiday makers the same superb beaches, coastline and scenery but without the crowds and property is still far more affordable in South West Wales than in the South West of England. Ceredigion is also home to superb beaches, the famous Cardigan Bay dolphins and beautiful Georgian towns like Aberaeron and offers an even more affordable alternative.
If you are thinking of purchasing a buy to holiday let, a second home or indeed moving to Pembrokeshire, Carmarthenshire, Ceredigion or Gower, do give West Wales Property Finders a call on 01834 862816. We can find your perfect property for you whilst saving you time, stress and often money too. We can also recommend surveyors, solicitors, letting agents, tradesmen, etc., handle all negotiations on your behalf and micro-manage the purchase for you right through to exchange of contracts to ensure the transaction proceeds smoothly. http://www.westwalespropertyfinders.co.uk
