If the past couple of years have shown us anything, it’s that life can be very unpredictable. From the economy to working environments to socialising, we’ve been subject to huge change. In good news, the holiday letting industry has continued to thrive; growing in popularity even before Covid 19, UK staycations have become the new norm, with prices for getaways on home soil soaring and holiday homes being booked up far in advance.
Whether you already own a holiday home or are keen to buy, you’ll want to know what 2022 holds for the world of holiday letting. Look no further – here’s our opinion on the outlook for the year…
Looking at the year as a whole, the first three months are typically the busiest for generating bookings – the peak day is the second Sunday in January – and 2022 seems to be no different. Feedback from the holiday letting industry suggests that there has been a surge of bookings since the new year, as we’d expect.
So, this comes as no surprise. Even without following annual trends, the winter surge in Covid cases and renewed uncertainty of foreign travel has no doubt caused many people to book holidays in the UK, rather than follow complicated testing protocol for overseas travel.
Passing the peak
Once we’re past these first three months, we’d expect to see the volume of bookings and cost of holidays reduce, returning (more or less) back to normal. That being said, the past two years will have a lasting effect on the industry; people have opened their eyes to the convenience and enjoyment of a UK staycation. The standard for holiday cottages and apartments has reached a new high; luxurious accommodation, welcome hampers and special touches are the norm, so there’s plenty of incentive to book a holiday in this country.
Keeping in mind this boosted interest in UK getaways, mortgage lenders have reported an increase in buying of holiday lets, a good solution to meeting the demand and keeping prices stable. New buyers are investing in second properties and holiday properties are emerging across the UK – great news for our economy and the tourist industry!
What problems will we face?
We can’t deny that, despite the promising forecast for holiday letting, there are also some hurdles that we’ll have to overcome in 2022.
Inflation in the UK is the first issue, as it has been predicted that interest rates may rise again, which will in effect mean higher mortgage rates. With holiday let mortgages already incurring higher interest rates than residential mortgages, this is bad news for potential buyers. That being said, if you run the cottage as a proper furnished holiday let, you do get to offset 100% of the mortgage interest against profits when it comes to working out tax, which can be a very significant discount.
Another potential risk to growth is the return of international travel. While this is something that we will welcome on a personal level, it is fully expected that many families will go back to treating themselves to holidays abroad in the sunshine. However, as we’ve already mentioned, it’s our prediction that UK staycations will remain a popular option – more so than before the pandemic, especially for ‘bolt-on’ breaks, like an impulsive weekend stay in Wales, or a mid-week break in the Lake District.
There is always a chance that there will be a change in legislation from the government, which could have a negative impact on holiday letting. That being said, the recent statement from government that it “backs small businesses, including responsible short-term letting,” makes us optimistic that there won’t be any punitive changes introduced this year.
Lastly, although we’re hoping that this isn’t the case, there is the possibility that the country will face another pandemic lockdown at some point. As we saw in 2020, this has the potential to shut down the holiday letting industry.
As things stand, we’ve seen early indicators that the holiday letting market is burgeoning. As with any industry, there are risks, but we’re happy to say that at the present moment, we are not aware of any specific red flags on the horizon.
The information contained in this article is accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time and so please speak to one of our Consultants to confirm the most accurate up to date information. Nothing in this article constitutes financial advice. You understand that by clicking any external links on this page that you will be leaving the website of Holiday Cottage Mortgages and we cannot be held responsible for the content of this external website. Please always consult your accountant or solicitor for all financial, taxation or legal matters.