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Life's a beach (or within 500m of one)

Life's a beach (or within 500m of one)

Roses round the door and a lovely view? Fireplace? hot-tub?..we all desire must-have items for a holiday cottage but as an investor do the expensive options make for a good return?

I have just returned from my annual jaunt to my family"s holiday cottage in a quintessentially Cornish fishing village. I have been holiday-ing there since birth and it is basically unchanged since my grandfather bought the place in about 1965. No mod cons, no wifi, perfect.

This Cornish Village in question has changed, not physically, but socially beyond all recognition. The old smuggling inn on the harbour is now a boutique hotel, only 2 fishing craft ply their trade and the beach which used to be strewn with fish guts, decorated with unwanted monkfish skulls (because nobody would buy monkfish) and alive with gulls is quiet, clean and picturesque. The 'locals" who lived and worked the sea are long gone, first to a string of council houses at the far end of the village and now for good as the quaint cottages have been snapped up by outsiders at eye-watering prices.

Owning a holiday cottage is a commonplace middle aged fantasy. For those of us frustrated by years of make do and mend in the rental market the opportunity to lovingly decorate and furnish a place that will be embraced by generations of our family is just about irresistible. What nicer way to make a living than by lifting £1000 a week from stressed out City dwellers?

But in the real world business is about money. I thought I would run a few figures for different types of holiday accommodation with similar market value:

 

Purchase Price

Income

Agent Fees

Advertising costs

Cleaning/Laundry

bills

Yield

Cornish Cottage

350,000(potential capital gain)

20,400

4080

2448

3200

1800

3%

Chalet home

120,000 (potential capital loss)

20,400

4080

2448

3200

1800

8.9%

Southsea 2-bed flat/house

160,000(potential Capital Gain)

20,400

4080

2448

3200

1800

6.67%

As is apparent in all things property, where there is muck there is brass. Higher status offerings such as gorgeous cottages put you in competition with dilettante investors whose wealth cushions them and whose interior design skills and budget ensure the success of their holiday let offerings. In a competitive market adding a hot tub or designer kitchen will see off the competition, as will having a manicured garden or that all-important view.

I am not sure how basic the bricks and mortar short-let market goes, I have stayed quite happily in serviced accommodation on a council estate in Birmingham at very low cost (£15pppn) with every last nook turned into a bed, and I know that providers in less fashionable areas are turning a higher margin with lower cost properties than my offering in Southsea. Providers are getting more and more creative with their properties to make the most of this lucrative market. The factors that play in making the most of your place include facilities, décor, location and great marketing but it seems that guests are happy to forego top locations for a small price consideration.

Written & oral information and advice from the Portsmouth & District Private Landlord's Association is given in good faith, but no responsibility whatsoever is accepted by the Association or it's officers for the accuracy of it's information & advice nor shall the Association be held responsible for the consequences of reliance upon such information.

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