80% of holiday home owners buy for retirement

A recent survey of our holiday let mortgage clients showed that over 80% of them intended to live in their holiday let property in retirement. This didn’t surprise us much as this statistic has remained level for a number of years now.

Buying a holiday let is different to a buy to let investment. We call it a “lifestyle purchase” as it rarely makes any profit on an annual cashflow basis.

Buy to let investing tends to be all about the money. How much money will it make me? Either in rental income, capital growth or both.

Owning a UK second property as a holiday let is a little different. Owners want to care for the property, maybe use it themselves occasionally and eventually live there permanently. This means that the out and out profitability is not so important, there is a long term strategy going on. Thats not to say that holiday rental income is unimportant. By using a good holiday letting agent a substantial income can be generated, much more so than a buy to let. However, the agents fees are much higher than buy to let with most charging 20-30% of the rent.

Whilst buying a property to retire in is good forward planning, it does not remove the need for additional retirement planning with pensions and other investments to maintain a comfortable standard of living.