However, by the late 1980s and early 1990s budget airlines emerged and, suddenly, you could jet off to the Costa del Sol for the same price as a week in the Cotswolds.
The pandemic, of course, has meant that certain popular holiday destinations are off-limits for the time being, meaning the so-called ‘staycation’ is back in vogue.
Polling experts YouGov surveyed 6,000 Brits in March and found that 47 per cent of us plan to take a staycation this year, with just 32 per cent saying they are keen to go abroad.
What does this mean? Well, not only is it great for the UK’s tourism industry, it also throws up a fantastic opportunity for brokers.
Growing holiday let demand
Anecdotally, our broker partners have been telling us that there is huge and growing demand for holiday lets, which is one of the reasons we entered the space in June.
Holiday lets have always been an attractive asset class for property investors, mainly because of the high yields they typically command as well as their attractive tax treatment.
Now, with the pandemic creating extra demand for domestic holidays, holiday lets have become, arguably, an even more attractive investment.
As a result, we expect brokers to be dealing with a higher number of holiday let cases than perhaps they are used to.
While that is a great revenue opportunity, holiday lets are a highly specialist area of the market and so there are a number of potential pitfalls brokers need to be aware of.
The finer detail
One of the most important is something known as Section 106, which many councils have started using to control how a property can be used and/or occupied.
In a nutshell, it means that councils can prevent properties in a certain area being used for long-term occupancies – for example, no longer than 28 consecutive days – to stop them being used as second homes.
While most people let out their properties for a couple of weeks at a time, some holiday let owners let out their properties for much longer periods, meaning a property with a Section 106 order attached to it would not be a sensible choice.
It might also stop your clients retiring to their holiday let when they finish working, something that many holiday let owners like to do.
Legally, there are also a number of requirements that need to be met for a property to be considered a holiday let.
For example, the property needs to be furnished, available for rent for at least 210 days in a tax year and must be let for at least 105 days each tax year – and for no longer than 31 days at a time.
It’s also worth having a conversation with your client early on about how they’d wish to purchase their holiday let – as an individual, a limited company or through a limited liability partnership. Each of these approaches has its merits and drawbacks and so this needs to be agreed at the start of the buying process.
Placing a holiday let case can be tricky and as a broker, you may not know all the requirements which is why it is important to speak with a specialist lender.