Holiday Business Mortgage

The market for self-catering holidays continues to grow and quality holiday accommodation is always in demand.

Holiday Parks
The traditional British, slightly shabby, holiday caravan site has largely disappeared, in recent years. Planning permission for new caravan parks is rarely granted, nowadays, but many existing ones have reinvented themselves for the 21st century. Sites are licensed by local authorities that lay down strict conditions about the permitted number of caravans. Divergence has occurred within the sector and most holiday parks cater predominantly either for static caravans or for touring caravans.

Lenders are unlikely to offer more than a 50 percent mortgage on a holiday park, so potential purchasers will require a significant amount of their own capital or access to other investors. 

Static Caravan Parks
Holiday parks hosting static caravans tend to be on a larger scale and offer a wider range of amenities than touring caravan sites and the site purchase price will reflect this fact. The minimum facilities will usually be a bar, restaurant, shop and children’s playground. In addition, they might include a swimming pool (indoor or outdoor), gym, fast food outlet and sometimes a hairdresser. 

In most cases an annual pitch fee is charged. An overall fee may be calculated or it can be broken down into site rental, council tax, water rates, insurance, etc. Charges for electricity and gas are usually made separately, depending on the amount consumed. Sites that allow sub-letting of caravans will usually charge a fee of around 20 percent of the rental value for this privilege.

Caravan Sales
Almost all holiday parks offer a selection of new and second-hand caravans for sale, which may generate a large part of the site’s income. Many will not allow caravan owners to purchase and relocate caravans from other sites or to resell caravans in situ. If private sales are permitted, the site owner will usually insist on taking a commission of around 10 to 15 percent. In addition, many sites also insist that caravans must be replaced when they reach a certain age, ensuring a steady turnover. 

Touring Caravan Parks
Most sites for touring caravans are relatively small scale and often run as part of another business, such as a farm or pub. Fees are usually charged on a weekly basis with prices generally higher during the summer months. Some offer winter storage of touring caravans, at lower rates. Many sites offer facilities for motor-homes and tents, especially at peak periods. Some local authorities allow fields to be used by campers for 28 days per year, without an additional licence being required.

Holiday Houses and Flats
The market for holiday homes remains buoyant. When buying a holiday property you have two main choices of how you finance the purchase. You can either raise a mortgage on the holiday property itself or you can re-mortgage your existing home to raise the sum required. The latter option is often easier to arrange and offers lower repayments. However, your main residence would be at risk if you were to default on the loan.

Many lenders do not offer buy to let mortgages on holiday homes, but a good mortgage broker should be able to arrange an appropriate mortgage. The amount that can be borrowed is calculated from the projected holiday rental income that the property would generate.

An additional benefit is that, unlike other buy to let residential properties, holiday homes can be treated as business assets for capital gains tax purposes.

Summary

  • High quality holiday accommodation is always in demand
  • In recent years, holiday caravan park standards have risen considerably
  • A mortgage provider is unlikely to lend more than 50 percent of the value of a holiday caravan park
  • Although many lenders do not offer buy to let mortgages for holiday home purchases, other mortgage options are available
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