Recap of holiday home news: 30 September 2009
It’s time once again for our holiday home news round up. Here’s what’s been happening:
Why a yurt is better than a holiday cottage
With holiday home prices beyond the reach of many of us, one family came up with a radical solution: their second home is a yurt.
Their “credit-crunch cottage,” is a 20ft-high cotton canvas hemisphere, 18ft in diameter, with slender ash ribs, navy felted wool lining and sisal flooring. With its own heating system, a stove made from a recycled gas canister, the yurt cost about £6,000 and is totally mobile.
Yurts can sit in your garden year-round, but if you want to park it in a field (your own, or someone else’s) for more than 28 days a year, you’ll need planning permission.
So if second home prices are beyond your means – consider a yurt, luxury camping on nature’s doorstep. With camping holidays seeing increased demand this year, they could also be a good holiday let investment.
The beginner’s guide to property tax
There are several different areas of property tax that second homeowners need to be aware of. This article outlines them and simplifies the ‘taxing’ issues, including:
Landlord taxes – You are taxed on rental income, being the amount left over once expenses and allowances have been deducted from the rent collected.
Holiday lettings – If you let out a furnished property in the UK for at least 20 weeks each year, your rental income can be treated under alternative rules for holiday lettings. To qualify, your property must be successfully let for at least 70 days at full commercial rates in short term lets of no more than a month.
Buying a property – When you buy a house in the UK you will have to pay stamp duty.
Selling a property – You may be liable to pay capital gains tax (CGT) on the sale of buy-to-lets or holiday homes.
Inheritance tax – is charged at 40 per cent on the value of your estate, including property, over the nil-rate band threshold – £325,000 for an individual and £650,000 for a married couple.
Simon Nixon, the co-founder of Moneysupermarket.com, a price-comparison website
set up in 1999 and floated in 2007 for £850m, earning him £103m – has now turned his attention to property: upmarket holiday homes.
So far, he has bought three of them — one in Cornwall, one in the Cotswolds and one in Wales. “If you buy in the best locations, over 20 to 30 years, you cannot lose, in my opinion,” he says.
His property in Abersoch, Wales cost £1.6m in late 2007, he has spent about £1.2m on the makeover and charges £4,000-£6,000 a week – to clients including Sir Alex Ferguson.
His ethos is that guests live a millionaire’s lifestyle — without having to be a millionaire. Nixon expects only to break even, rather than make a profit. “But I get a property in a great location,” he says. “The primary thing is capital appreciation, as far as I’m concerned. I’ll have loads of pleasure, and even if we don’t make money, in 20 years’ time, they’ll have gone up. That’s a safe bet.”
It’s interesting to see the opinions of successful entrepreneurs on holiday lets. It’s often a difficult job to run a holiday letting business. The returns are often unattractive compared to other investments, but holidays can be a great joy. As long as the expenses are covered, the capital appreciation on properties in great locations should make it a sound investment decision.
As a holiday rental owner, it’s likely that you receive the occasional complaint from holidaymakers, no hot water, soft bed etc. An online travel agent has revealed some of the more unusual complaints it received, including:
- One family complained that they were too “hot and sweaty” in their holiday clothes.
- One man complained at the number of holidaymakers with plain black suitcases, hindering his attempts to find his own plain black suitcase at the airport.
- Another woman wrote to complain that her plane journey was a disappointment because the sky was far too cloudy, spoiling her game of eye-spy.
- Following a trip to a local theme park, another woman complained that the Log Flume ride made her feet wet and the sun melted her ice cream.
- One couple criticised the excellent children’s entertainment at their resort – so good, in fact, that their children didn’t want to spend any time with their parents.
Travel advice: How to claim holiday compensation
Dealing with complaints from unhappy guests can be difficult, as everyone’s expectations are different. If you feel less inclined to make a financial gesture, due to the economic climate or due to the nature of the complaint, you need to know what options your guests have.
Holidaymakers chances of getting any redress from a reluctant property owner are extremely low, however in Britain they have the option of the small claims court. They could also contact the local or regional tourist board that is responsible for grading accommodation and complain about you. They could also contact agencies and websites where you advertise to complain and post reviews.
It’s important that you know the possible steps a dissatisfied guest could pursue to damage your reputation or seek compensation. This article gives a good overview of these.