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Is Buying a Holiday Lodge a Dream Investment ?

 

 

 When you've been flicking through the newspaper over the week- end you can't have missed the pages of glossy adverts selling  brand new sexy looking, state of the art holiday lodges in small managed parks set in an idyllic rural landscape. These new build developments usually have a view over a lake, a restaurant and shop on site and, are only a 10 minute drive from the beach. 

To tempt buyers  further the developer is offering what appears to be a very attractive guaranteed rental income deal amounting to an 8% return on the investment for the first 3 years. This is a seductive and powerful proposition. What's more the purchase of a spacious 3 bedroom lodge could come in at £150k cheaper than a similar size period holiday cottage that you've been eyeing in the same area. 

Is the sales pitch too good to be true?  Here is the reality check; 

1. Length of lease. The purchase will be for leasehold title for your plot which could be as short as 20 years. Read the fine print, there'll be lots of it. What happens at the end of the lease? Are you obliged to buy another new lodge from the park operator?  Can you sell your lodge before the end of the lease? What is the projected residual vale of your lodge if you want to break the lease? Will you have earned a payback on your dream investment ?

2. Rental incomeIs the 8% guarantee net of bookings        commission and cleaning costs ? What is the estimated rental      income once the guarantee expires? If you don't take up the      guarantee are the letting arrangements on an exclusive basis        via the park operator or do you have flexibility of choosing    another agent or, finding bookings yourself?

3. Brand position. What profile of holiday guests is the park        operator looking to attract ? What is their pricing policy ? The        ambiance of the site will be influenced by the visitors and the wrong crowd could affect your enjoyment when you stay there.   

4. Management charges. These costs can often amount to   £2.5k pa. What do you get for your money? Is there lodge owner representation on the site's management committee ? What controls are in place to prevent significant price hikes? 

 

Buyer beware !

 

Nick House

House Nouse

 

 

5. June 2018 by Nick House

Damage Deposits Can Be Damaging

                                                              

An increasing number of holiday property owners are demanding that a damage deposit of up to £250 be collected along with the balance of the rent due. Previously it was common practice to charge damage deposits for group gatherings celebrating a special occasion at a large country house where the risk of breakages and mess is inevitably much higher than it would be for a family break in a smaller property. Now owners of 2 to 3 bedroom cottages are following suit. In my experience the vast majority of guests will treat a smartly furnished well holiday cottage with the respect it deserves and if damage occurs more often than not it is down to a careless accident for which guests will own up to and pay for. 

 

It seems rather harsh to make a charge for an event which may not occur. The old legal adage "innocent till proven guilty" comes to mind. The property owner or agency will have use of guest's cash for up to 5 weeks.   Some mean spirited owners, it has to be said the minority, have deducted the replacement cost of 3 wine glasses and others have not made full refunds until 2 weeks after the departure date. This behaviour wouldn't exactly persuade the guest to book again.  

Handle guests with care!  

 

 

4. June 2018 by Nick House

The Frustration of Inflexible Arrival and Departure Days

 

                                         

 

 The vast majority of cottage agencies and lodge parks offer their customers a holiday option of 3,4 or 7 nights. If you want 3 or 7 nights your holiday must start on a Friday and for 4 nights you'll have to arrive on a Monday. So if you can only come for 2, 5 or 6 nights you won't be able to book or you'll either be prevented from booking or have to pay a premium. The logic of this approach is to maximise occupancy by preventing gaps appearing between lets. In essence the seller is dictating to the customer when they can and can't take their well-earned break. 

Such booking restrictions should be ditched. Whenever possible customers should be given full flexibility of booking any 2 to 7 nights with no pre-set changeover days. In the current economic climate the trend is to take more frequent but shorter UK breaks and the self-catering sector need to respond to the challenge. More of us are self-employed and can only get away when our work flow allows. The aggregate rental an agent or owner will receive for accepting 2 x 3 night breaks rather than holding out for a full week will more than exceed the cost of the additional clean. For those agents and lodge park operators who are unwilling to move with the times, they'll lose even more sales to the likes of Airbnb. The wake-up call will be become louder and louder - change over your days !  

 

Nick House

House Nouse

4. June 2018 by Nick House

The Airbnb Revolution

 

                      

The pros and cons of using Airbnb

Airbnb will be 10 years old in August 2018. Love or loathe them, the Company is here to stay and is currently valued at an incredible $30bn. Airbnb is obviously doing plenty of things right and seems to be winning the battle in the popularity stakes in UK over its portal rivals Holiday Lettings and Homeaway. The Company is also stealing a march over cottage agencies by pulling in property owners and sales.

Let’s have a look at what benefits Airbnb brings to table for the holiday buyer (guest) and property owner (the host).

The Guest

Pros

- Flexible arrival date

- Can stay for just 1 night

- Can be cheaper than booking a property through an agent

Cons;

- Quality of furnishings between properties varies enormously

- Some photographs are poor

-Descriptions can be misleading

-Properties are not inspected and number of guest reviews can be small 

-The price of a property listed by an agent will be higher than they charge to their customers

- The nightly price is fixed and does not reduce for longer stays

 

The Host

Pros

- Lower commission charges than an agent

- Global visibility

- Control over availability and no commitment to handover large blocks of dates as there is with an agent

Cons

- Must be able to clean the property on any day of the week

- Greater risk of damage and misuse of property

- No personal contact with sales staff

In summary the option to use Airbnb and/or one of the other platforms can work very well indeed for those property owners who have already decided to manage their own lettings and not use an agent. On the other hand, should you be too busy to be fully involved in the process, then the higher cost of using an agent to generate bookings will be money well spent.

Nick House

House Nouse

 

4. June 2018 by Nick House