Long Term Let, Holiday Let or B&B?
Once you’ve bought your holiday home in Cornwall and plan to make money from it, the next question is how. Should you use the property as a long-term rental? Would it be better to rent it as a holiday let? Or should you live in the property and run a bed and breakfast business?
Your choice will depend on your personal preferences, your financial circumstances and expectations, and on how much time you wish to dedicate personally to the property. In the property business, there’s no ‘one size fits all’ and ultimately the decision falls down to you. But to help you make a considered choice, we’ve listed the advantages and disadvantages of using your holiday home as a long-term let, holiday let or B&B.
The pros behind a long-term let
If you choose to use your holiday home in Cornwall as a long-term rental property, you’ll join a steady and stable market. Demand for desirable homes to rent runs high in sought-after areas so you should have no problem finding a tenant.
Setting up a property for long-term rentals involves considerably less expense than for a holiday let. You can get away with letting the property unfurnished, although you’ll need to kit out the kitchen. Your tenants won’t expect extras such as a pool, Jacuzzi bath or state-of-the-art television – part of the expected currency in successful holiday lets. You’ll also save on home insurance since premiums for holiday let properties tend to be much higher.
Income from long-term lets is steady and you’ll have the added advantage of knowing exactly how much to expect each month. The responsibility for council tax and utility bills falls on the tenant, which reduces your monthly expenditure.
The cons behind a long-term let
On the other hand, choosing to let your holiday home long-term has several disadvantages. Perhaps the biggest is the danger of your tenants not paying rent on time or at all. Recovering overdue rent often turns into an onerous, if not impossible, task.
And then there’s the possibility of damage. Tales of ransacked or badly-damaged rental properties are not uncommon and most landlords have at least one horror story to tell. In addition, you have limited access to the property and might be unaware of the damage until after the tenant has left. Securing a sizeable deposit and vetting your would-be tenants carefully are two ways of reducing the potential for damage (and non-payment).
Tax breaks tend to be lower on buy-to-let properties in comparison with holiday lets. Landlords with higher income no longer qualify for tax relief of up to 45% on mortgage interest payments and the current flat rate of 20% appeals far less.
Reasons to opt for a Cornwall holiday let
Choosing to use your property in Cornwall for holiday lets has multiple advantages. Like long-term lets, the market is buoyant and if you choose your location wisely you should have plenty of customers.
Holiday lettings in Cornwall have the potential to be more lucrative than long-term rentals and a quality property in a top location can earn several times more income annually. When doing your comparison calculations, make sure you include everything. Don’t forget to factor in the holiday let unknowns such as bad weather or disruptions in local transport that may result in cancellations or no bookings (and therefore, no income).
Unlike long-term renters, holiday let guests pay for their entire stay upfront so there’s no danger of non-payment. The potential for damage goes down too – if you choose your guest profile well, you’ll find that few holidaymakers cause damage to your property. And you have the chance to spot anything untoward straight away since you or your property manager will inspect the property at regular intervals. That said, general wear and tear can be higher because of the frequent turnaround of the property and every new guest will expect the highest standards, no excuses.
Using your Cornish property as a holiday let allows you to enjoy it too. You can block certain times of the year in your booking calendar for personal use and make the most of your holiday home. But limit your bookings to off-peak season if you want to maximise your income potential.
Why you might not choose to do holiday lets
Letting your holiday home isn’t all sweetness and light; there are also several compelling reasons why it might not for you. Top of the list comes the work involved. Consider carefully if you’re prepared to manage bookings, arrivals and departures, and do the cleaning, laundry and maintenance. If not, or you don’t have the time, think about using the services of a property management company. Their fees more than compensate for reducing your stress levels.
Setting up a holiday let involves a lot more expense than a long-term rental. In today’s highly competitive market, guests expect the very best. And to stand out in the crowd, your property needs to include a good list of extras. High-level fittings and fixtures also involve expensive maintenance too.
Running a holiday let requires certain people skills. However wonderful your property is, you’re bound to have to deal with guest complaints and problems. Handling these well isn’t easy and not everyone has the patience and tact to do it well.
Best of both worlds?
If you can’t choose between using your property in Cornwall as a holiday let or long-term rental, consider going for both. Known as a hybrid rental, this option involves letting your property to holiday guests during high season and to a tenant in the quieter months.
This gives you better potential for income and some time off from the daily rigours of holiday lets. It also ensures your property is lived in all year round – empty properties suffer more maintenance problems than those that are occupied.
If you go for a hybrid rental, check the tax implications before you commit to anything. HMRC has strict regulations on holiday letting and long-term rental periods – for example, you cannot let a holiday home for more than 155 consecutive days a year. Take professional advice on this point.
The benefits of running a B&B
Using your holiday home in Cornwall to run a B&B involves a totally different scenario to holiday lets or long-term rentals, although it does share a common advantage. A good bed and breakfast business in Cornwall in the right location also has the potential to do well and you should have little difficulty in attracting guests.
But the similarities stop there. One of the biggest advantages of running a B&B is that it offers a much more personal experience than holiday rental or long-term letting. You have the opportunity to meet your guests and spend time with them. You’re on hand for advice and local knowledge to a far greater extent than a holiday let owner. If you’re a people person, this possibly counts as the perfect job!
Using your holiday home as a B&B also allows you total control of the property. You take the money upfront and can closely monitor guest behaviour. You can also choose when to offer your B&B services and when to keep the house for yourself.
The drawbacks of running a B&B
On the other hand, running a B&B in Cornwall involves hard work, the hardest of all three options. B&B guests typically stay one or two nights, which increases the frequency of laundry and cleaning chores. A breakfast that your guests will want to recommend takes time to prepare. Not to mention cleaning of communal areas and general maintenance.
B&B earnings can be less predictable than holiday and long-term lets, and it’s difficult to calculate potential income in advance. You’ll also need to spend more time on booking management than for holiday lets because instead of one booking per week you’ll potentially be dealing with seven.
And finally, perhaps the biggest drawback to running a B&B is that guests enter your home. Using your home as a bed and breakfast business means you must be prepared to relinquish part of your privacy. You also mustn’t mind being on hand at all times to answer queries or offer recommendations, etc.
We’ve outlined the basic advantages and disadvantages of different uses for your holiday home in Cornwall. But as we said at the beginning, each case is different and suits different people. At Cornish Traditional Cottages we can offer expert advice and information to help you make a more informed decision. now to find out how we can help you.