There was speculation a couple of years ago that the booming demand for staycations was solely down to Covid restrictions. However, two years later, with a cost-of-living crisis gripping the country and people increasingly choosing to make more environmentally friendly choices, demand for holidays within the UK remains strong.
This is good news for the many thousands of investors who have purchased property for the specific purpose of holiday lets, and it’s not too late for those who want to buy somewhere for the 2023 summer season. They will have to move quickly though. According to the Smoove Home Movers Report, the average time taken to complete a property purchase is 153 days, and this has increased by 23% since 2019.
Average times do not mean that the process can’t be completed more quickly of course, and one-way investors can expedite a purchase is by using bridging finance to raise the funds they need, which is much faster to access than a term mortgage.
There is another big consideration as to why bridging finance can provide a good way for holiday let purchasers to buy their next investment.
The popularity of this investment class has increased significantly in recent years to meet the growing demand, which is good news for holidaymakers as it provides them with more choice. However, it also means that, for a holiday let investment to be successful, the property will need to attract guests in a competitive environment – and it’s the well-equipped, most attractive properties that will be booked first.
There will always be demand for best-in-class properties and, for investors, this means not only buying the right property in the right location, but also refurbishing that property so that it offers upgraded facilities and décor.
Bridging finance can provide investors with the ability to purchase a property quickly and provide additional funds to carry out refurbishment, to make it more attractive to discerning holidaymakers – with the opportunity to then refinance onto longer term funding, potentially at a higher value, in the future. Another advantage of this approach is that, when it comes to refinancing onto a term product, the property may have already established a track record as a holiday let over the summer period, and this may open more options regarding lenders and products.
This is certainly something worth discussing with your clients as bridging finance can help them to access an investment quickly, potentially increase its value and establish a track record. In taking this approach, not only could they benefit from letting the property to holiday makers this summer, but they could also put themselves in a stronger position to secure a lower rate on their long-term mortgage in the future.
Anna Lewis, Commercial Director, Castle Trust Bank