You buy a second home that is not your main home, either because you believe the area or the property will rise in value, or because you want to make the place pay for itself by renting it out as a holiday cottage when you are not there yourself.
Pros: you enjoy a second home which, if you rent it out, helps to pay for itself, and with any luck, you will be both getting rental income and enjoying capital growth. Also, the rents from holiday cottages and short lets are higher than with the assured shorthold tenancies you will be entering into with buy-to-let.
Another plus is that renting out a holiday cottage is considered a business, which means there are many more things you can offset against tax than with buy-to-let, which continues to be assessed as unearned income.
Cons: it is almost always the case that the times of highest rental interest will be the times you will want to use the property yourself. Also, you will have to keep the place meticulously tidy to satisfy the rental agency, and have plenty of changes of linen, towels and so on. Holiday cottages and flats have to come completely equipped with everything.
As occupants usually stay only a week or so - and stays are becoming ever shorter, with many holiday homes being rented only for weekends - the quick turnover means a lot of cleaning, clearing and preparing - and wear and tear. As one holiday cottage owner said: 'It's three times the money and six times the work of ordinary rentals.'
The other thing is that the holiday home must be in an area of high rental potential, where you may well be competing with other holiday cottages. As with buy-to-let, holiday lets have become a competitive business, both fuelled by the easy availability of mortgages.
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