One of the many features that make bridging loans so valuable to such a large number of borrowers is the variety of ways in which they can be used to facilitate property investment and help investors to generate stronger returns.
Holiday lets, for example, present an opportunity for investors to potentially earn much more from a property than they would by letting it on a standard AST, especially if they invest in renovations to make it more attractive to guests.
Bridging provides the perfect funding solution to help investors achieve this and holiday lets continue to be a huge area of our business and, while the supply of property in this sector has increased, so too has demand as more people choose to holiday in the UK.
Recent research issued by Sykes Holiday Cottages makes for cheerful reading for any investor active in or interested in this space.
For example, it states that the average annual turnover of a UK holiday let in 2022 grew to £24,000 – a 59% rise on 2019. And across the same time span, bookings for UK holiday lets rose by 48%.
Meanwhile, bookings made in the year to date for February 2023 are up 9% versus the same point in 2022.
The good news doesn’t end there. Further stats point to strong future growth, including the fact that 50% of holiday home owners say they have seen increased demand for UK domestic holidays since the pandemic and 27% say holiday makers are more likely to rebook properties.
The research also details how important keeping a holiday let property up-to-date and feature-rich is. Lets with hot tubs earn 37% more revenue, pet-friendly places earn 31% more, and properties with Wi-Fi set up earn a 26% premium.
The holiday let space is a clear opportunity for investors who have a taste for property but are put off by the continued uncertainties present in the traditional buy-to-let market. Unlike many parts of the economy, domestic holidaying is a space that is growing quickly and shrugging off broader economic worries.
It is also a fast-moving market, where buyers may wish to snap up properties quickly as well as raise more funds to upgrade and refurbish their purchase to meet the high standards of today’s holidaymakers in time for the holiday season.
No type of loan meets these requirements as perfectly as bridging loans do, where speedy decisions and flexibility are key product features. And once a bridging loan has been paid off, borrowers are often able to move onto a longer-term product at a lower interest rate or even capitalise on any rise in property value that may have occurred in the meantime.
As the current economic backdrop becomes ever more uncertain, the advantages of investing in holiday lets becomes starker. And bridging loans are the ideal way to access this space.
Anna Lewis is commercial director at Castle Trust Bank
