Profit from your vacation: where to buy a holiday home in Europe for the best rental returns
Holiday homeowners want their property to earn its keep. The rental potential is the top question asked by would-be buyers, says Robert Green, managing director of luxury property agents Sphere Estates.
Rents should be sure to cover running costs. Utilities, maintenance and service charges can rise steeply from year to year, so owners must understand how rents are calculated.
For example, a private property in the Algarve will be considerably cheaper to run than a resort home in Barbados that will charge you a percentage of the resort’s running costs.
A net yield of two per cent should cover those costs. A four per cent-plus yield on a holiday home is considered good in today’s market, says Green.
FOR YEAR-ROUND INCOME
Holiday appeal throughout the year will strengthen rental yields. Chamonix in France, for example, welcomes as many climbers, hikers and bikers in summer as skiers and snowboarders in winter.
City life attracts renters year-round, too.
Green says smaller units of one and two bedrooms have higher occupancy throughout the year, generating the best yields.
But there is some demand for large properties as multigenerational renting is gaining in popularity — especially if the grandparents are paying.
WHERE TO BUY FOR THE STRONGEST YIELDS
Here are three holiday home destinations that promise some of the strongest yields currently around.
- Lisbon, Portugal: in central Lisbon close to the designer shops lining the Avenida da Liberdade and also close to trendy Baixa, the second phase of one- and two-bedroom apartments at the popular Largo 57 development start from £305,000, with yields for short-term rentals of up to six per cent. Through Athena Advisers.
- Brienz, Switzerland: net yields of four to six per cent are estimated for Florens Resort on Lake Brienz, Switzerland’s deepest lake. The 155 flats are 10 minutes from Interlaken and half an hour from top ski resorts including Grindelwald and Wengen. One- to three-bedroom homes completing in 2020 start at £242,400 and must be available to rent when empty. Through Investors in Property.
- Zell am See, Austria: one- to four-bedroom flats completing this year at Lake Side Glockner Residence, close to Lake Zell and the resort ski lifts, start from £241,500 fully furnished with projections of a 6.15 per cent rental yield after all management and running costs. Through Mark Warner Property.
‘NOW WE CAN RELAX ABOUT LETTING’
A new type of online rental agency was set up last year by Tom Bennett and his wife after they let their holiday home in southern Spain, only to have it trashed.
“We use existing social networks to create a circle of trust,” says Tom.
“We offer amazing houses, better rental prices and expert local knowledge — but only to trusted members.”
With about 1,000 homes in 43 countries, all vetted by Tom and his team, Stay One Degree offers homes from £100 a night for a tiny Portuguese townhouse up to £40,000 for a private island sleeping 40 in the Bahamas.
Gemma and Richard Pearce from Hampshire joined in order to let their five-bedroom holiday home in Majorca.
They bought in 2015 and refurbished it into a special family home for them and their children Josh, Sophia and Phoebe. It rents from £245 a night.
“You feel you are accepting bookings from like-minded people who will look after your home,” says Gemma.
“We have used a local company to market our home but last season out of 30 weeks available we only had two bookings.
"We have used well-known online websites but feel they have become more impersonal. Stay One Degree allows us to share our home with a trusted network which we feel much more relaxed about.”