10 Tips When Buying a UK Holiday Let Property

Investing in a holiday let property can reap great financial and lifestyle rewards; the holiday letting industry remains buoyant, with demand from holidaymakers from the UK and overseas showing no signs of abating. However, to be in the position of running a successful holiday let business, it’s essential not to fall at the first hurdle: buying the property.

It’s common for people to be unaware of the complexities of buying a holiday let, when compared to buying a residential home. And while cash buyers will almost always be a seller’s first choice, there are numerous ways for buyers to make themselves an attractive option to the vendor and selling agent. With this in mind, we’ve put together 10 tips for successfully buying a holiday let property.

1. Have clear intentions

It’s important for buyers to emphasise how serious they are about purchasing the property. Vendors don’t want to offer the sale to someone who’s vague in their intentions and lacking a decisive plan for the purchase. A lacklustre attitude might raise concerns that the person isn’t going to commit and might pull out of the purchase; something that vendors definitely don’t want to see. Be specific about the property and specific and deliberate about the location.

2. Appoint a Holiday Let mortgage broker

Securing a holiday let mortgage can be more complex than a regular mortgage and for this reason, it’s a good idea for buyers to show that they’re working with a specialist holiday let mortgage broker, such as HCM. This knowledge can reassure vendors that not only is the buyer serious, but that there’s a good chance of a smooth transaction. If buyers are going it alone, there’s more risk that the mortgage application will fall through, which sends the vendor back to square one.

3. Get a Mortgage in Principle

By working with a mortgage broker, a buyer can produce a Mortgage in Principle (just ask us for help!) without any delay. Having an official document ready can add to a buyer’s credibility and also prove that they’re a viable applicant, which gives them an immediate advantage over competitive buyers.

4. Have your paperwork in order

In the same way that getting a Mortgage in Principle in place is a good idea, buyers can help themselves by getting their paperwork in order prior to making an offer on a property. Again, this means that there are no delays to the mortgage application process, which earns a big tick with vendors. Plus, having financial records to hand, such as payslips, tax returns and credit score, means that a buyer can demonstrate their affordability.

5. Proof of funds

With regards to the mortgage deposit, the buyer should have calculated the minimum and maximum amount of cash that they have available for the deposit. Plus, it’s important to have proof of deposit paperwork ready. For example, if the money was gifted, there needs to be a signed document from the giver of the funds. Alternatively, if the money came though inheritance, there needs to be confirmation of this from a solicitor.

6. Ltd vs Personal name?

It’s important for buyers to enter the process with some key decisions about buying and owning a holiday let already made. For example, the buyer should already know if the holiday let is going to be bought in their personal name or through a limited company. If it’s the latter, there should be an accountant in place to help to navigate the legalities and set up a holiday let business within a limited company.

7. Need to release capital from another property?

Where a buyer already owns multiple properties, information about their portfolio should be provided. Moreover, if capital is being taken out of the existing properties to fund the new purchase, the plans for this transaction should be provided. Again, having a specialist mortgage broker already in place will give vendors confidence that complex financial transactions can be managed efficiently.

8.  Have your surveyor ready

If the buyer wants to undertake a full property survey, they should have decided a company to use and act quickly in booking the survey. To neglect to get the survey sorted would only lengthen the buying process, which won’t be to the vendor’s preference.   

9. Have your business plan ready

As the property is intended for holiday let usage, the buyer should have their business plan in place. Mortgage lenders will require specific information in order to green light a holiday let mortgage, such as the property’s potential rental income. It’s important for buyers to consult a professional holiday letting agent in order to obtain a credible rental income forecast letter; without this document, lenders won’t be able to approve the mortgage.

10. Appoint your solicitor

Regardless of how complex or straightforward a buyer deems their personal situation to be, they should instruct a solicitor as soon as they’re in a position to make an offer. It’s essential to work with a reliable solicitor who can navigate the legalities of the property purchase; if the process of finding a good solicitor – with availability to take on a new client – is delayed, there will be difficulties in proceeding with the purchase.

To conclude, when it comes to attractive, quality properties – such as those that we see in the holiday let market – the buying process can be competitive. In today’s market, where the industry is flourishing, it’s important for buyers to stand out against the competition and prove that they’re the best candidate. At the very least, buyers who make themselves an attractive choice have more room to negotiate a good purchase price on their dream holiday home!

For more information about getting a holiday let mortgage, contact HCM here.