Invest in a holiday lodge & your family's future
If you are considering buying a holiday home or lodge, then Simmonds & Elliott can provide useful resources and advisory services to help you make more informed investment decisions. We offer 1-2-1 consultancy on holiday home investments, we can refer you to an independent financial advisor, or organise a viewing tour of holiday lodges and resorts in your chosen location.
Benefits of buying a holiday home or lodge
There are many benefits to buying a holiday home, lodge or caravan. For one, you will have a place to stay whenever you want to take your family on holiday, you can escape with some friends, or use your lodge as a bolt-hole to work from home in a more relaxing surrounding.
With the recent boom in staycations (caused by Covid travel restrictions) and office workers escaping from the city, there has been a corresponding growth in the sale of homes in the country or by the coast. The most popular areas for second and holiday homes are on the South Coast, in Wales and in Devon and Cornwall, due to their commutable distance from London and the midlands.
Holiday home ownership as an investment
Holiday home investment has also seen a surge, as landlords have sold their buy-to-let properties, or new investors have taken equity from their residential properties, as house values rose sharply during the pandemic.
However, buying commercial property is much more complex than buying a personal residence or even a buy-to-let property. In most cases, you will be purchasing either a new or second-hand lodge or caravan, but the arrangement for the plot it sits on can vary, with licenses of varying lengths and a few park operators offering full mortgagable leases.
Advantages and disadvantages of different types of Leases and Licenses
Below are the three main types of license agreements or leases offered by holiday resorts and operators:
- A short license - typically 10-25 years
- You will have to pay in cash or use a short-term loan or finance (typically a max of 10 years).
- This option does not incur any stamp duty
- It is mainly offered for lower-value caravans or lodges, which are sold for the owner's personal use, rather than as an investment
- At the end of the license period, you may have to leave the site (taking the property with you) or renegotiate a new lease
- During this time it may be difficult to resell your caravan or lodge, as it will devalue, due to the reducing number of years on the license
- A long license - typically 50-125 years
- You may be able to get a longer-term loan or even a mortgage if the license is more than 50 years
- This option does not incur any stamp duty
- A longer license is often offered for mid to high-priced lodges (above £125,000), which are often purchased for a mix of personal and investment purposes
- As long as you have sufficient years left on your license and your agreement permits it, you should be able to resell your lodge and license, however, it is unlikely to increase in value
- At the end of the license period, you may have to leave the site (taking the property with you) or renegotiate a new lease
- A long lease - typically 100 - 999 years
- This option is similar to buying an apartment and does incur stamp duty. Unfortunately, if you already have a residential property you will pay a second home rate (at around 5%)
- You will need to employ a solicitor and have the normal searches (and fees) associated with buying a residential property. It will also be recorded in the purchaser's name at the land registry office
- A lease is more likely to be offered on higher-priced lodges (above £250,000), which tend to be purchased for investment purposes
- A leased property may be purchased by individuals (either personally or by setting up a limited company).
- There is a major advantage when buying a holiday home with a long lease, in that you can often get a full mortgage or long-term loan
- However, the proportion you can borrow is likely to be less than 60%, so you will have to find a significant amount of cash to pay your share of the purchase price, stamp duty and purchasing fees
- After 10 to 20 years, you may be required to upgrade (or even replace) your property, to ensure that it is maintained at the expected standard of the resort.
- With a long lease, the property (and lease) is more likely to increase in value, so it should be relatively easy to resell your property. This is why this type of contract is highly popular with investors
Finding your perfect investment holiday-let
At Simmonds & Elliott, we help investors that want to find park operators that have resorts which offer holiday homes and lodges that are suitable for their personal and commercial needs.
In other words, investors need to find properties in resorts that attract high rents but they need to be able to get the necessary finance to purchase the property and plot in the first place. This means that investors should only consider holiday homes with a license of at least 50 years, or preferably a full lease, of more than 125 years.
Surprisingly, it is remarkably difficult to find this information on the operators' websites or in their glossy marketing brochures. Some of the biggest park operators often have the shortest licenses, and only want owners that will use the holiday home themselves. These are often large caravan parks and are often purchased using a loan, in a similar way as if you were buying a car or a new conservatory.
Trying to find the duration of a license is often complicated by the fact that each site within a group, can have different arrangements, facilities and even open times (some closing for a few weeks or even months during the winter). Some sites are only designed for owners to use for themselves, and renting is discouraged. Some sites have strict rules about how you (or your guests) can use the lodge, for example, allowing pets, the number of weeks allowed for personal use etc.
It must be said that the operators and sites offering long leases of more than 75 years, do tend to shout about it. So, it is often the case that if you cant see a promotional message on the website boasting about a long lease (or license), then the operator probably offers a short license of fewer than 20 years.
Search resorts using our free members-only directory for lease-hold, long-license and mortgageable holiday lets
We are currently building a new directory of resorts and properties suitable for investors. You will be able to view resorts based on their location but if you want to search based on license length, buy-to-let returns, rental incomes etc, then you will have to sign-up to receive our email alerts and to access more details on each resort and the properties currently available for sale.
Our sales consultant Dawn Clode, is then available to provide more details and to arrange a booking with our sales partners on the resort. We can also refer you to our broker if you need to raise finance on the lodge, or our accountant if you need to set up a limited company, as a vehicle for purchasing your holiday let.
Simmonds & Elliott are here to help you invest in holiday homes and holiday lets
Whether you are buying a holiday home for your family to use, or as a commercial investment; Simmonds & Elliott can provide practical help and resources to make the research and sales process easier.
You can read our free resources, or book a 1-2-1 investment consultancy session, where we can provide impartial advice depending on your personal objectives, budget and preferred type of property and location. We can also refer you to an independent financial advisor (who specialises in loans and mortgages for buying your lodge).
Viewing tours of holiday parks selling holiday lodges for investors and try-before-you-buy
We can organise a viewing tour of holiday lodges and resorts in your chosen location. We will have a discovery call with you to understand your requirements, your preferred locations and the dates you want to visit.
We will liaise with our partners at the different resorts to put an itinerary together for your viewing tour. We will try and get free or discounted accommodation for you, where possible. (Note: We recommend that where possible, you should visit off-season, as many resorts will give you free accommodation, particularly if you already have finance in place).
Contact us now, by completing the form below, if you would like us to organise a booking tour on your behalf, or if you would like to rent our lodge.
Explore some of our top resorts we recommend for holiday-let investment
