With the trend of staycations here to stay this summer, expat holidays in the UK remain one of the most attractive investment options when using an expat mortgage in the UK.
MANCHESTER, GREATER MANCHESTER, UK, June 29, 2022 /EINPresswire.com/ — As June rolls around, the festive season is in full swing and many UK travelers are looking to sun, relaxation and travel. However, an increasing number of holidaymakers are turning to staycations or ‘staycations’ in the UK as the effects of the Covid-19 pandemic continue to influence behavior in everyday life.
Why vacation rentals?
“Many factors contribute to people’s increased desire to vacation closer to home,” says Stuart Marshall. “A combination of Covid, Brexit, passport delays and a general reluctance to travel overseas due to the heightened global difficulty, is contributing to more and more people holidaying in the UK . With the increased pressure on the cost of living, there are many disincentives for people planning holidays abroad, including a relatively low pound and rising flight prices. Additionally, there is a growing contingent of environmentally conscious holidaymakers who are hesitant to take flights for holidays abroad in a bid to combat climate change. The increase in the number of holidays in this way means that UK investors are looking to take advantage of this growing market and invest in UK holiday rentals.
Investors notice stays.
The increased desire of vacationers to take vacations is also noticeable in the world of buy-to-let. In fact, according to a study by the Suffolk Building Society, 17% of the adult population in the UK have considered owning a holiday rental in the past two years. This is particularly due to the youth of the population. While young people see the potential of holiday rentals as a way to earn money, it is clear that they are also recognizing an increased willingness to holiday in their country themselves. This indicates the emergence of an interesting new market group, with young people increasingly choosing stays rather than holidays abroad. The number of domestic investors looking for holiday rentals should not be ignored by savvy UK expats and overseas domestic investors watching a competitive investment market.
Among those looking to become vacation rental owners, certain features were attractive when choosing a property. 31% of respondents said proximity to beautiful scenery was the most important attribute for a vacation rental, while 30% of respondents said proximity to the beach or coast was most important.
The Rightmove report out of the ten real estate hotspots for 2022 also seems to indicate a growing trend towards vacation rentals. Topping Rightmove’s list was Brixham in the borough of Torbay, Devon, which saw the biggest annual rise in asking prices in the UK – a 25% increase over the last year. ‘Other areas like Brixham are set to emerge as existing and potential UK expats and foreign national holidays leave owners searching for ‘the next big thing’. Brixham is one such area, located on a popular 22-mile stretch of coast (“The English Riviera”), but offering considerably cheaper asking prices than neighboring Dartmouth. A price increase of this type can only be the result of very inflated interest in real estate in this region, as investors increasingly seek to get involved in the vacation rental market.
Holiday rentals for UK expats and foreign nationals.
Increasingly, UK expats and overseas investors using mortgage products for UK expats and foreign nationals are looking for new ways to invest in the lucrative UK property market or ways to diversify an existing property portfolio. With buy-to-lets often targeted by punitive legislation, holiday rental properties have become more competitive for UK expats and overseas investors. This is especially true with recent changes to rules surrounding mortgage interest relief and incoming rules for EPC ratings on rental properties. Claiming mortgage interest tax relief is no longer allowed for landlords, but vacation rental owners are eligible for this tax relief, provided the property meets a certain set of criteria. Additionally, recent rule changes mean that by 2025, any rental property with an EPC rating below C will not be allowed to accept new tenants. Existing tenants will also no longer be allowed to stay in energy-deficient properties by 2028.
“Even without these legislative changes, staycations should be very attractive to UK expats and foreign national investors,” says Stuart Marshall. “In a well-managed vacation rental property, one week’s rental can provide the equivalent of one month’s rental income in a long-term rental. These high returns, coupled with increased interest in vacation rentals – often resulting in block bookings throughout the spring and summer, sometimes years in advance – make for a powerful investment combination. This is supported by a report from consumer choice group, which one?that expected vacation rental returns would reach 14% by 2022, an incredible figure compared to the best performing long-term rentals. »
“A very popular trend that we have seen emerge over the past few years in the UK expat and overseas community is the increase in seasonal rental incorporations. This allows UK expats and foreign national investors to be taxed with corporation tax at 19% instead of income tax of up to 45%. In addition, UK expats and foreign national investors who incorporate vacation rentals into a limited liability company also have the potential to offset the effects of inheritance tax and are able to more easily build a larger portfolio using the profits from one property to buy more through the company. . An expert UK expat and overseas mortgage broker can help you decide the best way to invest in a holiday rental. It’s a complex and competitive market, so finding the right location and investing using the best mortgage deal for UK expats or foreign nationals really makes all the difference to the quality of the investment.
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