How to build a successful holiday let business

Holiday lets have long been an exciting (and lucrative) alternative to traditional buy-to-let investing.

But the sector was supercharged during the pandemic when travel restrictions spawned a boom in “staycations” and homes in Britain’s most beautiful tourist destinations became hot property.

What’s more, ever-tightening rules on long-term rentals has greatly boosted the appeal of having a weekend home that can also provide an income when not being used by family and friends.

However, fears over a lack of affordable housing and growing local opposition to investors has seen several areas impose restrictions on second homes.

Yet there is still money to be made (and homes to enjoy yourself when they’re not being let out). And despite Brexit, there are also opportunities in Europe – and beyond.

Telegraph Money can guide you through every step, whether it’s your first foray into holiday letting, needing to navigate property taxes or taking the crucial decision of where to buy and how much to spend for the best yields.

In this guide we will cover:

• ‘Airbnb is for amateurs’
• Where to buy a holiday home
• How to (legitimately) reduce stamp duty on your second home
• Good news – you can still invest in Cornwall
• Where to invest overseas for the best returns
• Getting around Brexit rules in France
• How to buy (and renovate) your dream Italian home for less than €100,000

‘Airbnb is for amateurs’

In Britain, holiday let bookings are largely secured through platforms such as Airbnb, Sykes Holiday Cottages and Booking.com.

Before taking the plunge you should calculate your costs (including cleaning fees, the commission taken by the various platforms and so on), how much you can earn on the rental and where you should buy.

Then you need to decide how to furnish your property in the most efficient way. Hot tubs, for instance, can add as much as 50pc to a property earning potential, according to Sykes.

Telegraph Money spoke to several holiday let owners to glean their top tips with one seasoned investor revealing why he no longer uses Airbnb.

Where to buy a holiday home

For ease, buying a holiday home near where you already live is hard to beat. You can save on cleaning fees, if you’re prepared to muck in, and can make regular spot checks.

But there are plenty of reasons why this could be the wrong approach.

Avoiding the growing number of local restrictions on holiday lets is key, as is buying the cheapest properties for the highest yields.

You might be familiar with buy-to-let investing, but there are some differences with holiday let loans.

As with the buy-to-let market, some consideration should also be given to potential capital returns, although this may be less important if you will also use the holiday let and don’t plan to sell.

Everyone knows Cornwall is a lucrative spot for a holiday let investment, but it wasn’t the highest-earning area in Britain.

How to (legitimately) reduce stamp duty on your second home

Second homes are liable for the stamp duty “surcharge”, a higher rate that only applies to properties other than when you are replacing your main residence.

And the surcharge – which was introduced by former chancellor George Osborne – can produce enormous bills.

For instance, a £800,000 second home would attract £51,500 in stamp duty, compared to £27,500 if it was a main home.

There is not a huge amount of wriggle room on avoiding the charge, although the “three-year rule” could be helpful if you also plan to sell your usual home.

Good news – you can still invest in Cornwall

Cornwall, and St Ives in particular, have been at the centre of the storm around second homes for years. The carving out of the county’s quintessential fishing villages has struck a chord in council offices, and across the country.

Despite lots of noise, various bans in St Ives, Fowey and Mevagissey only apply to new homes – not the kind of properties that those desiring a Cornish bolthole are usually looking for.

However, a change to council tax rates on second homes, slated for 2025, is likely to be far more damaging.

For the best deals, look beyond the tourist hotspots for some half-forgotten gems.

Where to invest overseas for the best returns

Being a landlord in Britain – whether it’s long-term rentals or short holiday lets – is undoubtedly becoming harder.

Changes to tax rules, particularly the removal of relief on mortgage interest, are squeezing profits and with a house price slump on the horizon, the future is not looking rosy.

As a result, some investors are looking overseas. The Caribbean jewel of Barbados is attracting a stream of British investors, as is Dubai with its dazzling parade of high-rise apartments, huge numbers of expats and generous tax breaks.

Nearer to home, experts recommend Poland, specifically the southern town of Krakow with its year-round tourism – where well-built properties are available for as little as £150,000.

Getting around Brexit rules in France

Since January 2021 British nationals wanting to stay in an EU country for more than 90 days out of 180 have needed a visa (unless they have an EU passport, of course). A growing number of British people have been navigating visa rules as a result.

The boom in “work from anywhere” work perks or entirely remote jobs has made living in nearby France a reality for more people.

Telegraph Money spoke to several Britons who have successfully applied for visas based on the income from bed and breakfast businesses and “long stay temporary” visas, though these are not a long-term solution.

How to buy (and renovate) your dream Italian home for less than €100,000

Who among us hasn’t dreamed of swapping rainy Britain for la dolce vita? First it was the cooking shows glamorising life in Italy, now it is property renovation that has us drooling.

Several regions have introduced “house for a euro” campaigns to repopulate remote (but stunningly beautiful) hilltop Italian villages.

But while these typically come with strict rules (and are not intended as holiday homes) there are plenty of properties that, though a tad more expensive, are better long-term prospects for your dream holiday home.

Aside from cheap ancient property, many Italian regions offer highly attractive tax regimes for pensioners. In some towns new residents can pay as little as 7pc tax on their pension income.

Is it time to follow in the footsteps of TV’s Amanda Holden and Alan Carr and build your own dream holiday home in the Italian sun? The journey starts here.