Who’s investing in holiday cottages for sale?

Generally speaking, there are three types of buyers who invest in holiday cottages and holiday cottage complexes.

Firstly, there are individuals, couples and families who are interested in a small holiday cottage business for sale to provide some income to fund early retirement. These buyers would often have a valuable property to sell in or near to more metropolitan areas, and would be looking for a principal house with a couple of cottages or a smallholding, to provide some income. The market is strong for this type of buyer and property at the moment, with the stamp duty holiday fuelling the housing market and allowing them to cash in on an increased value of their existing property.

The second buyer type is a corporate buyer, who would be a leisure operator already in the business. They might already own multiple caravan sites and lodge parks. They’d typically be interested in the larger properties with increased capacity for income, and are keen to invest at the moment as they see the next few years as a boom for the domestic tourism (staycation) market.

And finally, you have trusts and charities who are looking for solid, long-term investments. These buyers would often be professionally advised for their purchase. Although they’ll invest at any time, this type of buyer is less active at the moment, as they prefer to buy when the market is a little slower and they can pick up property at a lower price.

What’s the holiday cottage sales market like at the moment?

The market is strong, with many properties on the market selling quickly for their guide price or above.

Supply is down and demand is up, but buyers remain discerning. Buyers who are hoping to find the perfect property and don’t snap up properties quickly often find that they miss out to someone else.

If you’re thinking of selling a holiday cottage business, now is a great time to put your holiday cottage on the market.

What to consider when buying a holiday cottage business for sale

1. Location

This almost goes without saying, but location is key. Demand will always be highest for holiday cottages to rent either near the coast or in national parks. Proximity to popular tourist attractions will also help to ensure a good market.

2. Size

There is no perfect size of holiday let, it will always depend on your circumstances and what you hope to get out of it. As an investment, 8-12 units is a good number – large enough to achieve economies of scale and a substantial income, but still manageable by the owners.

3. Turnover

It’s always worth closely examining the business and the overheads to establish that it is a profitable and sustainable business, but also to identify where any cost savings could be made. A popular way of doing this would be to install renewable energy to reduce bills. That said, most holiday cottage investors are looking to hit the ground running and see a return from day one.

4. Potential

To really get the most from your holiday let investment, look for opportunities to improve the holding or the business. This could be looking for development potential to expand into outbuildings or additional land that might be suitable for glamping or shepherds huts. There may also be scope to improve the owner’s accommodation, either in quality or by improving the privacy.

Consider also what you could bring to the business to improve it. An underperforming business may not be due to any inherent characteristics of the property or its location, and may be turned around relatively easily. For new entrants to the market consider the impact that your transferable skills might have, from accounting, marketing and IT to catering or activities such as photography, yoga, archery and outdoor pursuits where you have the ability to run courses.

5. Price

Fundamentally, it’s key that the price paid for the property is proportionate to the likely income. This is where it’s important to closely analyse the accounts, and make sure that current net profit is sustainable, or even could be increased. Use these figures to assess what the property is worth to you, but bear in mind that the value of the owner’s accommodation, which will not provide an income in itself, is excluded from these calculations.

You should also consider how you will finance the move from the outset – most lenders are now looking for a 50% deposit, which was much lower pre-covid.

Holiday cottages for sale

Our national network of rural leisure experts sell a wide range of holiday letting businesses and wider portfolios which incorporate holiday letting investments. Here is a selection of the best on the market this year, or you can browse all our holiday cottage complexes here.