Owning a holiday home can be a real asset to a family, fulfilling its purpose of a relaxing get-a-way (or whatever the purpose of the property has) rather than a monetary asset.
In today’s economic environment a holiday home purchase here in the UK should fulfil a purpose, rather than a personal investment purchase that will increase in value year by year.
The property can still be a commercial purchase to rent to holiday makers but it will need to a be a mathematically sound investment that pays for itself over the year as the asset value is unlikely to boom and could possibly fall – leaving you in a difficult situation if you need to sell.
If you are lucky enough to buy the holiday home outright the overheads of owning the property will be typical of owning a home such as the normal bills, holiday home insurance and maintenance. Renting the property for just a few weeks a year may be enough to cover these costs and provide you with a cost free holiday property.
If you need to mortgage against the property, the above applies but renting will need to be for longer periods of the year, probably during peak season to maximise rents and returns. The issue being your use of the property could be limited to non-peak season or specific weeks, making the home a less flexible get-a-way.
If you rent for longer periods it may be wise to use a local rental specialist to take bookings and perform some basic organisation like cleaning and possibly your holiday home insurance. These companies will obviously charge, but if you are not local to the property it may be more cost efficient to use them, especially with the cost of petrol as it is and the time on the phone it takes to organise bookings and cleaning.
Remember, a holiday home is supposed to be a purchase that lets to get away to unwind, not add to your stress levels!