A Step-By-Step Guide to Selling Your Holiday Home
Whether you’re selling your holiday home to retire from holiday letting or are buying somewhere new, there are several steps you need to take to ensure a hassle-free sale.
Why are they buying
Typically holiday home buyers are either looking to invest in a holiday home for family use which will also be holiday let, they are buying a holiday home for family and friends use only, or they are buying purely as an investment for the rental income. Once you identify why the interested party is buying, you can tailor your offering to appeal to their requirements.
Explain why you are selling
Buyers may want to know the reason you are selling when weighing up the pros and cons of owning a second home. Maybe you are retiring and are looking to pass on a successful holiday letting business or want to use the proceeds from the property sale to fund your future.
Whatever your situation, tailor your selling strategy so prospective buyers can see the potential in your property. You may lose a sale if you moan about the stress, cost and legislation involved when renting out a holiday home.
Selling a holiday let with existing bookings
Most holiday let owners will have a dilemma about whether to continue to take bookings and generate income whilst the property is on the market in case it doesn’t sell, or to stop taking bookings so the property appeals to the widest number of buyers. If you continue to take bookings you should inform customers that the property is on the market before you confirm their booking to ensure they are happy to proceed.
Here are three possible solutions to selling a holiday cottage with existing bookings.
The buyer honours all your existing bookings
Ideally, you’ll sell your holiday letting business as a going concern to a buyer who wants to honour all your existing bookings, keep the furnishings, furniture, and inventory. This is the ideal situation and ensures a smooth transition of the business on completion.
Usually, the current owner will transfer any money taken for future bookings to the new owner. As the guest experience could change with the new owner, you should inform guests that the property is changing hands and that there will be a new host. If they choose to cancel their booking you should give a full refund.
If the guest decides to continue with their booking, you should get their permission to share their booking details with the new owner.
Sell when all bookings have been completed
Another simple solution is once the sale has been agreed no further bookings are taken, and the sale is completed after the last booking is completed.
What happens to existing bookings if the buyer wants to cancel them?
After completion, the new owner might want to update the property and do some repairs or use the holiday home solely for themselves. Do they have to honour existing bookings, or can they cancel them?
Is the booking contract between the current owner and guests, a third-party booking site or a holiday letting agent and the guests? It may be that on selling the property the original contract is no longer valid, and the new owner isn’t obligated to honour existing bookings. In this instance the guests should be refunded.
To see where you stand legally, get a solicitor to check your booking contract.
When is the best time to sell your holiday home?
Putting your holiday let on the market in the peak summer season can mean it’s difficult for a potential buyer to view the property if it’s booked up with guests. If you put it on the market at the end of the peak season this gives buyers plenty of time to exchange contracts and get the property prepared for the letting season.
Presentation is vital
Getting your home ready for viewings is vital when it comes to selling your holiday cottage. Potential buyers will want to imagine what it will be like for them and guests to stay there. Even the best-kept properties will show signs of wear and tear after a long summer season, so spruce up your home to attract buyers (and possibly add to the price) before putting it on the market.
Buyers (and travellers) are influenced by kerb appeal so if the holiday home looks nice from the outside, they are enticed to see more. The more welcoming the front of the house and garden looks, the more appealing it will be.
That all-important first impression will be made as soon as a potential buyer sets foot inside your holiday home so make sure it’s welcoming. Light a fire (or turn on the heating) if it’s cold and use candles or diffusers so it smells nice (a house that smells bad triggers a negative reaction in buyers).
A deep clean and a fresh coat of paint are low-cost but worthwhile ways to create a good impression. Lack of cleanliness, especially in kitchens and bathrooms is the biggest turn-off for buyers, so ensure these areas are spotless.
Create a property information pack
If you’re selling your holiday let as a going concern, in addition to providing accounts, creating an information pack with a breakdown of the ins and outs can be a useful selling tool. Consider the types of information a buyer would need to understand what a great business you have built.
- How much rental income do you receive a year
- What are your main seasons
- How many guests are repeat
- What type of guests do you get
- What are your expenses
- Where do bookings come from
- Is there an existing relationship with a letting agent or cleaner
- How do you manage bookings
- What software do you use
- Opportunities to improve bookings and income
Where to sell your holiday let
As your holiday cottage is likely to be in a tourist hotspot with lots of established holiday lets and buyers looking for holiday let investments in the area, your local estate agent is usually the best place to start. They will typically market your holiday home on their website and the major portals – Rightmove/Zoopla with details of the letting figures and potential within the advert.
You should also check if any local letting agents have a ‘holiday homes for sale’ page on their website as a way to reach prospective holiday home buyers. Sykes currently has a section on their website that pulls listings from Zoopla.
Before you list with an estate agent, check recent sold prices for properties of similar size and specification in your area on Rightmove so you know the realistic market value.
Avoid giving guarantees
The buyer may require you to give guarantees related to things like forward bookings and regulatory compliance. Ideally, you should sell your holiday letting business ‘as seen’ as you can’t guarantee how the business will perform under new ownership.
How much tax will you pay?
When it comes to selling your holiday let, you’ll need to be aware of any taxes and tax-relief schemes that apply to you. When you sell your second home you must pay capital gains tax on the profit that you make from selling, compared to the original price that you paid for the property – not on the entire value of the sale.
How much capital gains tax you would need to pay on the sale profits of your second home will depend on whether you are a basic-rate, higher or additional-rate taxpayer. To ensure you take advantage of any costs and tax allowances that can reduce your tax liability, speak to your accountant.
How insurance can help the sale
Potential buyers will want to know about your holiday home insurance history. Is your property claims free? If you’ve never had any problems getting subsidence and flood insurance, this provides reassurance to the buyer that the insurance underwriter hasn’t flagged any such risks. Ensuring the property can be comprehensively insured is one less item for the buyer to worry about.
Have you sold a holiday let or gone through the process of buying one? Please add your tips in the comments below.