There’s been a lot of press articles lately about holiday lets being the a better investment than a residential let. This has led to a stampede of property investors to move away from the traditional, safe and relatively passive residential lettings to, on the surface at least, more lucrative holiday lettings market.
But is a holiday let really a better investment than a residential let in Hayle?
In this article I’ve looked at the first step of initial set up costs for both options. This is based on a 2 bedroom terrace house in Hayle with a purchase value of £170,000.
Residential Let – Set up costs
Furnishing: Minimum requirement: Fresh paint throughout, carpets suitable for heavy usage and easy to clean, curtains, blinds, light shades, Oven and hob, tidy garden – Assuming you employ a decorator and need to purchase new carpets then you’d need to allow around £3,000 initial costs.
EPC (Energy Performance Certificate): By law residential lets must be a minimum energy efficiency of E. You will already have an EPC from when you purchased the property, and this only needs to be renewed every 10 years. There will only be additional costs if you need to bring your property up to this minimum efficiency standard.
Gas safety certificate: yearly. Around £100
Electric safety certificate: from 2020 this will be every 5 years. Between £160 – £200
Total set up costs guide for a residential let property: £3,300
Holiday Let – Set Up Costs
Furnishing: Minimum requirement: decorate to a high standard, carpets, curtains, light shades, beds and bedroom furniture, 3 sets of every laundry item, towels, sofas, dining furniture, white goods, well equipped kitchen, TV, music system, wifi, gaden furniture, BBQ.
You would therefore need to allow around £10,000 initial costs.
EPC (Energy Performance Certificate): There is no energency efficiency minimum legal requirement for a holiday let. However, if you’re hoping to let out all year, its wise to still consider a property that’s E rating or above. It will be you who’ll foot the heating bill for the property and guests tend not to be the best at managing their heat consumption.
Gas safety certificate: yearly: Approx cost £100
Electric safety certificate: You should have an EICR carried out in line with residential let legislation once every 5 years. Its also advisable to have an annual PAT test carried out on all electrical appliances regularly. Neither are currently legal requirements. However, by not taking these steps, could not only invalidate your insurance but also mean that you could be personally liable for any claims should something go wrong.
EICR and PAT Tests – Approximately £300-£400
Total set up costs guide for a residential let property: £10,500
Is there anything I’ve missed? Do you disagree? I’d be interested in your views…..
In my next article I’ll look at the costs and true net income figures for running your property as both a holiday let and a residential let: Compare buy to let with holiday let rental income in Hayle.