Property Investing

I have never really been caught up with the idea of having a second home and letting it out when I am not occupying it, but I can definitely see the appeal and why demand for such properties is rising.

I was reading an article by holidaylettings.co.uk the other day and in it they revealed that year on year UK holiday home enquiries have risen by 73%!

Even by recession standards that is a dramatic increase and one definitely worth taking note of if you are interested in breaking into the sector.

Yet according to their research, these enquiries have been global. South Africa, Turkey, Croatia… all have been witnessing similar increases in holiday letting queries too:

• South Africa – holiday enquiries have increased 13 times above their 2008 figures
• Croatia – enquiries for 2010 are up 113%
• Malta – enquiries for 2010 are up 94%
• Greece – enquiries for 2010 are up 74%

There is no disputing that 2010 is proving to be a profitable year for property investors and professional landlords alike.

In many ways holiday lettings is an incredible way to earn an extra income.

Not only will your ‘Tenants’ cover the entire cost of your mortgage whilst you are not occupying the property, but in many instances your second home will give you monthly bonus. Why? Because rental yields are notoriously higher than mortgage repayments.

Take this scenario for example.

Lets say you own a £120,000 property in Luton (3 bedroom) with a 25 year mortgage of 4.99%. Opt for an interest only mortgage and your repayments will be £499 a month. However choose to rent out this property and you can easily charge rental yields of £741 a month. Do the maths and that is an instant profit of £242.

Now I don’t know about you, but an additional income of £242 a month for simply renting out your second home is just too good to ignore, especially if you only use this property for 2-3 months out of the year. For the other 9 months you can easily earn £2,178.

Taking all these facts into consideration, owning a second home could definitely be a worthwhile venture if you have got the cash to invest.

PLEASE NOTE: rules surrounding ‘Furnished Holiday Lettings’ are changing in the new tax year, so make sure you familiarise yourself with this, before you consider joining the club.

Wendy xx