Investing in holiday home in uk - what are the issues to consider?

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BoscoTalking

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I’m thinking about buying a holiday home either in Wales or England in the next year where we would rent out for some months of the year through an agency. Both my brother and I plan to do this as an investment for retirement and fully in cash to avoid mortgage issues. He is lives and works there and I am in Ireland full time.

It would be great if the contributors who understand the issues like this could help me understand the difficulties or list any potential potholes that could occur. Thanks.
 
BoscoTalking said:
Both my brother and I plan to do this as an investment for retirement and fully in cash to avoid mortgage issues.
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Are you already both maximising pension contributions to a "regular" pension? If not then you should probably look at that first.
 
Weaknesses:-
1. You will be liable for income tax from rental profits in the UK and Ireland.
2. You need somebody to arrange cleaning, meet-and-greet, maintenance, etc. Advertising will cost.
3. If those you trust to make life easy for you fall down on the job you’re doomed and fast. Don’t under estimate the potential.
4, Property insurance for letting is not cheap.
5. You’ll need to inspect the property at times during the year. Travel costs.
6. You’re in a partnership, decisions will need to be shared and you won’t be able to go it alone.
7. Much of your Capital will be tied up and not available after “investment.”

Strengths:-
1. You appear to have the savvy to attract repeat customers (important in holiday lets).
2. Capital available.
3. Value of property may increase progressively.

Options:-
1. Buy mobile homes instead; You'll likely more continuous income and less risk and us e less capital.
2. Long term rent (off season) on solid property likely may not necessitate retainer for an agent.

Gut Feeling:- Too much of a risk, loss of your decision, costly, no control, potential for huge loss.
 
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BoscoTalking said:
Both my brother and I plan to do this as an investment for retirement
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Are you buying one property together? Or are you both planning to buy separate investment properties?

You absolutely should not buy with someone else no matter how well you get on with them now.

Your needs will change. He lives in the UK and is likely to make more use of it.
You might need the finance for something else but he doesn't want to sell.

Even if the two of you get on well, there will be others involved - spouses and children if you leave your share in the will.

It's a recipe for the family falling out.

Brendan
 
BoscoTalking said:
as an investment for retirement
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Don't cod yourself.

A lot of personal spending is justified with the word "investment".

Buying a property in a country in which you don't live is not an investment. It's a nightmare in terms of tax, legal compliance etc.

As ClubMan says - maximise your pension contributions - that is the best investment.

If you love the Lake District and want to have a holiday home there and can afford it on your own, go for it by all means. But treat is as holiday expenditure with ongoing costs. Not as an investment which generates income.

Brendan
 
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