Invest in a holiday home
In these tough economic times, buy a holiday home that can pay its way. In the first of a two-part series, David Spittles looks to the south
The summer holiday season has started and staycationers across the nation are heading for the hills, country and coast. And with estate agents' windows full of enticing properties - from chocolate-box cottages to fabulous seaside apartments - what better time to search for a holiday home that pays its way?
What the experts say
Specialist agencies recommend that you do your research before you buy. Your holiday home should be easy to rent out and sell on.
Well-located homes that sleep six can comfortably gross more than £16,000 for the main season from Easter to September. Even a small cottage can generate £8,000 a year.
Tax breaks (untouched in the last Budget) are available to owners of furnished holiday accommodation, and the letting restrictions are not onerous, meaning you can still enjoy personal use of the property during the year.
Holiday Cottages Group, which owns the Cottages4you brand and handles homes in England, Scotland and Wales, says high-season rents typically range from £400 to £1,000 a week. Location and appearance are the essential ingredients and agencies are always on the lookout for well-equipped character homes or modern-design properties in attractive or idyllic settings.
The popular, traditional thatched cottage with inglenook fireplaces, oak beams and all the creature comforts is always a winner. And with the environment and eco-friendly homes high on the agenda, green and contemporary minimalist has its place in the brochure appeal.
Properties with a sea view or close to canals, rivers or lakes, are top of the list with holidaymakers. But rural beauties surrounded by countryside, preferably close to a pretty village are going to attract the romantic buyer.
Cornwall, Devon, Dorset, Isle of Wight, north Norfolk and the Lake District are holiday-home hotspots but proximity to London is a winner, too. Certain parts of Kent, Sussex and Suffolk are sought-after, even in winter, because people can book short breaks and weekend getaways. Then there is the "festival factor", such as proximity to Glyndebourne, Aldeburgh, Cowes, Goodwood and Glastonbury. The very pretty Cotswolds, a two-hour commute from the capital, is a top favourite and is being targeted by new-build developers offering lock-up-and-leave convenience alongside the area's sophisticated leisure scene.
Large properties, such as farmhouses or country mansions, appeal to groups of friends and families and therefore tend to get booked up first, according to agencies. Studios and small flats are not recommended unless they are for a particular niche market or an event area, such as for sailing, surfing or riding, for example.
Tasteful conversions of barns, stable blocks and other farm buildings have extra appeal, especially if they are suitable for families and have access to a swimming pool, tennis court or games room.
The hot tip from holiday cottage rental specialist Rural Retreats is, if you want to rent it out, kit it out. It rejects four out of five properties that are badly furnished. The secret is to make the interior simple but stylish, and with all the waterproof, stainproof, hardwearing yet good-looking fabrics around today, you should be able to do it. And it is always good to include the wow factor items your renters haven't got at home - an Aga, spa bath or a four-poster bed.
If you are serious
If you discover that you enjoy the holiday lets business, you can expand and buy a house with a separate holiday cottage in the grounds, or a group of renovated farm buildings, where there are audited accounts verifying the property income.
Glyne Barton Cottages in Bodmin has a listed four-bedroom farmhouse plus eight stone-built cottages, all on the market for £2.5 million. Gross turnover last year was £256,157. Call Chesterton Humberts on 01823 331234. The buyers who are willing to pay a high price in second-home hotspots can receive dramatic returns on their investment, says Liam Bailey, head of residential research at Knight Frank.
At Constantine Bay, a coastal village three miles from Padstow in Cornwall, new semi-detached eco homes are for sale overlooking Watergate Bay. These are priced from £465,000 and come with an option for a guaranteed rental income of up to £35,000 for two years. For more information, call 01392 848844. Buying a wreck to renovate may be cheaper - but you need to consider the hassle involved.
England's most popular second-home district
England's most popular second-home district is South Hams, Devon, where one in 10 homes are registered as second properties. The 10 most expensive seaside towns in England are all in the South-West, with prices fuelled by City bonuses and other money coming out of London.
Savills has identified a super league of 14 locations including Salcombe (Devon), Padstow (Cornwall) and Aldburgh (Suffolk) where prices are at least twice the country average.
Sandbanks (Hampshire) tops the table with average house prices more than £800,000. Typically in these places prices have jumped more than 300 per cent in the past decade.
The best of both world's in Newquay
Adrian Willey, 40, bought a seaview "surf pad" at Zinc, a new development in Newquay, because he was spending so much money on Cornwall hotels.
"I wanted a property that was low-maintenance, safe and secure as well as somewhere I could rent out. I bought the flat last May and already it has been booked for six weeks of holiday lets this summer, which is great. When I'm there, I wake up, look out of my window, see the Atlantic Ocean and check out the surf."
Mr Willey decided on a lifestyle change after being made redundant from IBM. He moved to Portsmouth from London to indulge his passion for surfing.
Image gallery: the average cost of renting in every London borough