If you’re a landlord or you’re thinking of investing in property as a source of extra income, then naturally you’ll want to get the highest possible return on your investment. The potential revenue you can generate and the amount of additional work involved is likely to have a strong bearing on what you use your property for.
For example, it is possible to earn triple the amount of rent from a holiday home than from a buy to let property. However, the additional costs involved with owning a holiday let, such as higher agents’ fees and the extra upkeep involved with décor and furnishings, can make holiday lets much more costly to run than the average buy-to-let.
Holiday home landlords will also need to make sure that they obtain the right kind of mortgage. Although residential and buy-to-let mortgages may seem more flexible, they generally prohibit you from letting your property to holidaymakers. Bending the rules by going down this route would almost certainly invalidate your property insurance.
The correct insurance
Similarly, it’s essential to take out a specific holiday home insurance policy on your property. Regular residential or buy-to-let insurance policies require the property to be occupied for the majority of the year. If this is not the case – as with most holiday homes – then the property is at greater risk.
The number of different tenants coming and going in holiday homes also pushes up the risks in insurance terms. For these reasons, residential and buy-to-let insurance policies will not be valid for a holiday home.
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It’s also worth considering that not all holiday home insurance policies are the same, and quite rightly so as holiday homes vary greatly, more so than standard properties. A successful holiday rental usually has a novelty value that helps it to stand out from the crowd. The property itself may be unusual, or it could be in a highly desirable location, or have notable features such as a Jacuzzi or hot tub.
Holiday homes and buy-to-lets both have their own advantages and disadvantages, and it’s worth considering these carefully before deciding which one is right for you. They also have their own individual insurance requirements. Whether you are renting to tenants or letting to holiday makers, ensuring you have every eventuality covered is essential.
Relying on an online quote and buy system to do this can be a risky approach. With no one to talk you through the ins and outs of the policy can make it difficult to know if you have the right insurance for your property. Using a reputable broker such as Alan Boswell Group can make arranging your insurance simpler. By asking you the right questions about your property we can put together a bespoke policy that reflects the individual nature of your property and will mean you are correctly covered in every case.
Whether you have a buy-to-let or a holiday home, speak to an adviser on 01603 218000.
Read more: Is buy-to-let worth it?