Selling a Holiday Let

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One popular choice for owning a second home is to buy a holiday let, which generally refers to a property that you intend to rent out to others for short stays in areas that holidaymakers like to visit. If you eventually make the decision to sell such a house or flat, there are various potential complicating factors to know about, yet selling at a profit and doing so quickly will be feasible.

1. What is the definition of "holiday let" when selling property in the UK?
2. Taxation issues associated with owning a holiday let
3. Reasons why buyers might be interested when selling your holiday let
4. Factors that can make it harder to sell a holiday let
5. Choosing your method to find a buyer for a holiday let
6. Top queries and answers about selling a holiday let

What is the definition of "holiday let" when selling property in the UK?

Holiday lets are properties that someone owns but does not live in as their primary residence, and they instead rent out to people for days, weeks or even longer to use when on holiday. They differ from buy-to-let homes, because those are rented out to tenants to use as their place of residence, typically for many years. Instead, holiday lets are rented short term to various people for their breaks.

Although many different types of freehold and leasehold properties in the UK have general definitions that are not specified in UK regulations or laws, that’s not the case with holiday lets.

Known as both holiday lets and furnished holiday lets, these properties are located throughout the UK. And the homes must also be furnished to the extent that there’s enough furniture for a regular visitor to occupy normally during their stay at the property.

The duration that the property is let out for holiday purposes is another factor, as the house or flat must be available for someone on holiday to let for at least 210 days out of each year, and the home must officially be available to let to the public for at least 105 days out of each year. The occupancy cannot last longer than 31 days, otherwise that’s not considered a holiday let.

Those are the main elements of a holiday let that the UK government uses for the purposes of assessing the amount of tax that you might ultimately have to pay on any extra income you earn from renting out the holiday property.

And as you’ll see in the guide below, the tax considerations are just one of the various issues that you will have to consider in the event that you decide to sell your holiday let.

Taxation issues associated with owning a holiday let

Holiday lets allow the owner of the property to rent the flat or house out for a short amount of time to use for their holiday, in exchange for a set payment. This is considered to be additional income on which you might have to pay tax, depending on the total annual amount. Be sure you speak with your tax advisor for the latest tax guidance as this is a constantly changing area.

Renting out a room within your main place of residence to a holidaymaker can be done tax-free if you make less than around £7,500 per year (check with your tax advisor for current thresholds) by doing this – anything over that amount will be taxed.

Any other income will be subject to tax, such as the amount of money you earn from renting out a holiday home that you never use as a private residence. That’s because the home is considered to be effectively a business, and the income from it will be taxed as such.

But this can also potentially work to your advantage, because you should be able to deduct any of the costs associated with your holiday let from the total amount of rental income you make from it in a given year, which might reduce the amount of money on which you can be taxed. For example, if you have spent a lot of money on new furniture for the holiday yet in a single tax year and that value is greater than the income that you took in from the property in the same year, you may not need to pay any tax because the expenses outweigh the income.

Capital gains tax is another important issue, because you might have to pay this tax on any profit that you make from the sale of your holiday let. Capital gains tax typically applies to people who own multiple properties in a portfolio and who sell a property that they never used as a private residence, but instead used for business purposes such as renting out, or using for other commercial reasons.

The good news is that you will only have to pay capital gains tax on the profit that you make from selling the holiday let compared to the original price that you paid for the property, and not on the entire value of the sale, which helps to reduce your overall tax liability when selling.

Reasons why buyers might be interested when selling your holiday let

Although owning a holiday let can be profitable for many people, there might come the time when you decide that you want to sell the house or flat. This could be due to no longer wanting the stress and cost involved with maintaining and renting out the property, a desire to reduce the size of your property portfolio, wanting to use the proceeds from a property sale to fund your retirement, coping with a major change in your personal life, such as a new child, and many other reasons.

Selling your property as is may be an option particularly if you are looking to get things moving as quickly as possible.

Whatever your situation, it can be useful when starting the process of trying to sell a holiday let to understand what prospective buyers might see as potential pros and cons of owning the home. This can possibly help you to tailor your selling strategy and hopefully speed it up.

The concept of a holiday let isn’t new, but is growing in popularity thanks to websites like Airbnb, which make it easier for owners to list their holiday let homes for others to see and rent. The website charges a certain amount of commission to owners who successfully let out their holiday homes to people, wherever in the UK they may be located.

The relative ease of advertising a holiday let can therefore be a leading reason for why someone who has previously thought about owning such a home might be willing to buy yours.

And related to the simplicity of finding holidaymakers for the property, the ability to earn extra income is perhaps for many potential owners the biggest attraction to owning a holiday let. It allows for a relatively passive stream of income, albeit one that fluctuates seasonally.

There are some upkeep costs involved, including paying the utility bills for the holiday let, repairing any damage caused by weather, holidaymakers, or anything else, and potential buyers will account for these in deciding if the potential income from the property will outweigh the costs. If you are willing to share such information with buyers, it might even be useful to show them how much you’ve been able to make in terms of net profit from owning the holiday let.

Factors that can make it harder to sell a holiday let

Just as there are several factors that can make a holiday let an enticing purchase for someone looking for a second property, you should also be aware of some issues that could make some private buyers potentially less interested in making an offer on the holiday house or flat.

Some private buyers will need to first obtain a mortgage to pay for the cost of buying your property, and there are mortgages specifically designed for holiday lets. These can often have many more terms and conditions than mortgages for conventional private residences, and they might also come with higher interest rates. These additional barriers for obtaining a mortgage can unfortunately be enough to deter some individuals from wanting to buy the property.

A simple way to avoid this potential outcome is to contact a quick home buyer like LDN Properties, because they have the financial ability to immediately purchase properties like holiday lets without first having to wait many weeks or months to get approved for a mortgage. This can significantly speed up the selling process compared to selling to a private buyer.

The seasonal fluctuation of the income that someone can be expected to make as the owner a holiday let can be another factor that might deter some buyers. Although they could be enticed by the idea of earning money from the holiday let, it might not be consistent enough for them, particularly if your property is located in an area that people only want to let in certain months.

Again, a fast home buyer could be your solution here, because they will be focused less on such issues as seasonal demand for your holiday let, and may still be willing to buy it.

Choosing your method to find a buyer for a holiday let

When you’re ready to finally sell your holiday let, the last major decision that you will have to settle on is the method you’d like to use for finding a buyer. Generally, you can either sell via an estate agent, using an auctioneer, selling to a fast buyer, or trying to sell on your own.

Review the various pros and cons of the four methods below, and find an approach that best matches your individual wants and needs. It can help to draft a budget for the sale of your holiday let that includes important details such as how much money you are able to spend on the sale, how much time you’re willing to wait to find a buyer, and other crucial factors. Apply these elements to the choices below in order to find that one that best suits your situation.

Selling via an estate agent

If you use an estate agent to sell your holiday let, they will do the vast majority of the work involved with finding a buyer.

First, they’ll prepare a listing that will include descriptions of the property’s main features, which for a holiday let will focus particularly on factors like its location, total number of rooms, and desirability for holidaymakers, as well as photographs of the interior and exterior. They will advertise this listing in local newspapers, online, and in their office. And estate agents also handle viewings to take buyers on tours of the home, and they’ll hear any serious offers.

But in exchange for all of this work, estate agents also impose fees on sellers. This fee will be deducted from the sale proceeds, which in turn will reduce your overall net profit. Be aware of this downside, particularly if your top goal when selling is to maximise your profit.

Also, selling via an estate agent can take a very long time, and it’s not unheard of for some properties to remain on the market for many months, or even an entire year, before anyone makes a genuine offer. Even if they do make a true offer, there’s nothing to prevent them walking away from the sale without penalty up until contracts have been exchanged.

You should also be aware that some estate agents might try a sneaky trick of quoting you an elevated price for selling your holiday let, even if they truly know that the property will only attract offers at a much lower price. The reason that they do this is to encourage you to sell your property using their services, so that they can charge you commission if they find a buyer.

Thankfully, you can fairly easily avoid falling for this trick – start by getting free sale price quotes from many estate agents, and then also look up the price of similar holiday let properties on property sales websites such as Rightmove or Zoopla. Then calculate the average of all those values, and the medium price should be much closer to the realistic sale price that you might be able to achieve for your holiday let property.

Using an auctioneer

Another way that you can try selling your holiday let is to use an auctioneer, who will also take on much of the work in finding a buyer. They will prepare and market the listing for the house or flat, host the auction itself, and oversee that completion of any successful offer on the property.

Auctioneers will typically charge commission as a percentage of your holiday let’s final sale price to cover their work involved in securing a buyer, and this amount will be subtracted from the sale proceeds before you receive any, which will lower the net profit you can make.

It might be possible to have the winning high bidder on your property pay some of the auctioneer’s fees, so you should always ask about this possibility at the start of the process.

Just note that auctioning your holiday let is a gamble, because it might not receive any bids, in which case it will be deemed not to have sold, and you’ll have to start over again with trying to find a buyer for the property. Or you might just get a single bid at the reserve price – this is the lowest value at which you are willing to sell the holiday let. Be sure to select a reserve price that will still generate a profit for you, even after deducting whatever fees the auctioneer charges.

It can take quite a long time to sell your holiday let through an auction, with a wait of at least several weeks or longer between when you first list the property for sale and when the auction occurs, with a further wait after a successful auction for the buyer to complete all of their required steps. Typically, a winning high bidder has 28 days to do this, although some auction houses might give them more or less time, so it’s always worth checking this issue early.

It’s possible that you’ll be offered the choice between a traditional auction or a modern auction. With a traditional auction, the listing for your property will be advertised for a set period of time, usually at least a month, to generate interest in the auction that takes place on a certain day. During the auction, bids will hopefully be placed on your holiday let, and the highest value at the end of the auction will be deemed the winner. By contrast, with the modern method, bids can be placed 24 hours a day, seven days a week, during the period that the listing is active, and the highest bid at the time the listing expires is deemed to be the winner.

Selling to a fast buyer

You might want to think about selling your holiday let to a fast buyer, like the London-based LDN Properties, because these companies provide a straightforward, no-hassle and zero-stress option for receiving a competitive and speedy offer for the holiday house or flat.

As their name suggests, fast buyers are able to swiftly purchase properties, and it should take no more than just a few short weeks to complete every step, including paying you the proceeds and exchanging contracts on the holiday let. It’s usually much faster than the other options for selling a property, and is a good match for those owners looking to sell as quickly as they can.

Fast home buyers are also able to consider making offers on the widest possible range of properties even if you are selling without a gas safety certificate. Some estate agents or auctioneers might struggle with knowing how to best market and attract interest in certain holiday lets, but quick home buyers won’t have that problem. They can consider making fair and fast offers to buy almost any type of property, regardless of its age, condition, shape, size or type, and the location of your holiday let also won’t matter. If you are looking to sell specialist property types such as airspace and roof space, they will also be able to make a competitive offer.

This can be good news for those owners whose holiday lets have some problem that private buyers might deem to be a dealbreaker that causes them to lose interest in the house or flat, for example a physical flaw like subsidence or widespread dry rot. Quick home buyers won’t be deterred from wanting to buy your holiday let just because of such an issue, and nor will they dramatically reduce their offer for the property by citing that problem as the reason. So even if your holiday let has some negative issue that you lack the time, money or energy to fix before seeking a buyer, you could still get a competitive offer for the property when using a fast buyer.

Another great benefit of selling this way is that the legitimate quick home buyers will never make you pay any commission – for example, LDN Properties believe that owners deserve to keep the full proceeds from the sale of whatever property they’re selling.

One question that you should ask when researching which fast buyer to use is whether they belong to a third party entity known as The Property Ombudsman (TPO). This organisation is responsible for publishing regulations that are designed to shield owners from falling victim to fraud in the quick buying industry. You should be cautious about selling to a company that either cannot prove it belongs to TPO, or that refuses to join, because either scenario may be a scam.

You can check quickly, and for free, whether a fast home buyer is genuinely registered with TPO. Just visit the organisation’s website, and look for the “Find a Member” button on the left side of the welcome page, and click on it – you’ll be prompted to type in the name of a specific company. If you do this and the quick buyer is truly registered with TPO, you’ll then be shown their full membership details. If the search produces no results, then the company is not truly registered with TPO and you should be very wary about selling your holiday let to them.

When assessing the various factors, including time, cost and potential profit, using a quick property buyer can often be the ideal choice when you’re ready to sell your holiday let.

Trying to sell on your own

Alternatively, you might be interested in selling the holiday let on your own. This can be n time-consuming, stressful and expensive way to try finding a buyer.

You will have sole responsibility for developing a listing for the property, advertising it, organising viewings for potential buyers, and for taking any genuine offers. Even for a highly skilled professional this can be a lot of work, so it’s only recommended to pursue this method of selling if you have experience with selling a home, or have an expert willing to help for free.

There’s absolutely no guarantee about the timeline for selling your holiday let this way, and whilst it’s possible you could sell within a few days or weeks, it’s much more likely that you could be waiting for many months or even more than a full year before you obtain a serious offer.

And perhaps the only major advantage of selling on your own is that you won’t be liable for paying a third party, such as an estate agent or auctioneer, any commission for their work in finding a buyer for the property. Although this can seem like a welcome outcome for anyone wanting to maximise their sale profit, it also comes with the stress involved with selling solo.

Top queries and answers about selling a holiday let house

Property owners thinking of selling their holiday let quickly usually have a few questions to ask us, ranging from the repairs needed before selling through to selling a home in a poor condition. Here are some of the top questions we’re asked about selling a holiday let property:

Your top questions when selling a holiday let property