Are you interested in creating a business that involves renting vacation properties? The United Kingdom is a great place to do so. Your vacation rental business could make a bundle in 2022, as more people are trying to make up for all the time they couldn’t travel during the pandemic.
There are a lot of things that you have to take into consideration when you are investing in real estate for your vacation rental business. One of the most important factors to think about is where to find the right property. One option is to consider buy-to-let park homes. If you do this and follow our tips on doubling your vacation rental revenue, you can do very well.
Buy-to-Let Park Homes
Since the coronavirus pandemic began in early 2020, the number of people opting for “staycations” over going abroad has soared. Even now that travel restrictions are easing, many people are choosing to stay in the UK for their holidays. Your rental business can turn a huge profit from these people.
The appeal is obvious — no need for a passport, no lengthy border-control procedures, no baggage restrictions, and many people feel safer travelling in their car and staying in self-catering accommodation. According to government figures, 11,000 second homes in England have been “flipped” to become holiday homes since the start of the COVID-19 pandemic. Holiday rental prices continue to soar, making park homes a potentially savvy investment.
But, if you’re considering investing in a buy-to-let park home, what do you need to know?
What Is a Park Home?
A park home is a mobile home located on a private estate. Although technically movable, most park homes remain static and will not be moved from the site it is originally located. There are certain criteria a property must meet to qualify as a park home:
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- Must be movable in one or two pieces
- Should be a maximum of 20 metres long, 6.8 metres wide and 3.05 metres high.
Unlike bricks and mortar houses, when buying a park home, you only own the property, not the land it sits on. You will probably have to pay a monthly fee to rent the land from the owner of the residential or holiday park.
Most park homes are built off-site and moved to the owner’s preferred location, where they are hooked up to drainage, electricity and gas. They are typically constructed from a timber frame mounted on a steel chassis. There is a lot of choice in the type, size, finish and furnishing of your mobile home, and you should be given lots of input into the final design. This allows you to create the ideal holiday space for your target audience.
What’s the Difference between a Residential and a Holiday Park?
When you buy a park home, you will need to decide where to keep it. Most people choose either a residential or a holiday park.
The main difference between the two is that you have no right of permanent residence in a holiday park. If you’re investing in a park home to rent it out, this probably won’t affect you too much as your main residence will be elsewhere. However, it’s worth noting that some holiday parks close for one or two months of the year, which will affect your annual rental income.
Buying a park home on a holiday park is typically more affordable than buying one on a residential site, at least in part because there is no council tax to pay.
One disadvantage of holiday parks is that properties kept there are not covered by The Mobile Homes Act 2013, which gives better protection to park homeowners.
Can You Get a Mortgage for a Park Home?
You can’t use a mortgage to pay for a park home. Most owners buy with cash, although there are other financial options to explore. For example, if you have a property to sell, you could consider using a house part-exchange (PX) scheme with a park-home specialist. If the park-home developer offers PX, this will allow you to sell and buy in one smooth transaction.
Is a Park Home a Good Investment?
There are many benefits to investing in a buy-to-let park home:
- Appeal to the eco-aware holidaymaker — modern park homes are typically more energy-efficient than older bricks and mortar holiday lets.
- Park homes are an affordable investment — compared to buying a traditional holiday let.
- Park homeowners have more legal protection than ever before — The Mobile Homes Act 2013 gives owners more legal backing if issues with site owners arise.
- Demand for staycations remains strong — in August 2021, research by consumer group Which? revealed that self-catered accommodation in the UK cost 40% more than in the summer of 2019.
- Growing demand from retirees — many UK residential parks are designed exclusively for older people, and this market is growing apace.
- Low running costs — a park home costs less to run than a bricks-and-mortar property because they are more energy-efficient.
What to Consider When Investing in a Buy-to-Let Park Home
- Choose a popular location — do your research before buying to ensure your park home will be booked throughout the year.
- Cater to the target market when selecting your home — are you catering for couples seeking a romantic escape or families who want a budget holiday?
- Take advantage of tax benefits — a park home must be available for rental for at least 210 days per year to qualify for the most favourable “Furnished Holiday Letting” tax status.
- Residential vs holiday park — which one suits your needs best?
- Compare prices — check out listings online to get a feel for the prices for different locations and property types.
Demand for self-catering accommodation in the UK is higher than ever, and it’s a trend that looks set to stay for the foreseeable future. Investing in a buy-to-let park home could be a savvy move financially. Do your research and take time to understand the different options available to give yourself the best chance of achieving a healthy and consistent income from your holiday rental.
Create a Profitable Business with Buy-to-Let Vacation Properties
You can make a lot of money starting a business renting vacation rentals in 2022. You will want to consider taking advantage of buy-to-let properties’. They can be profitable.