To generate passive income
Whether you are looking to earn a passive income to build wealth or free up time, investing in property can be a smart way to approach it.
Unlike many passive income streams, owning and running a holiday home requires no specialist skill set and its income potential is both substantial and consistent. While passive income from property is still possible with a standard buy-to-let, you can expect much greater rental yields of up to 30% more from short-term holiday letting.
For considerable tax benefits
If you meet certain criteria, the tax benefits of holiday home investment are substantial.
A holiday let is treated as a business for tax purposes, rather than an investment giving rise to investment income. To qualify, your property will need to be available for at least 210 days a year and let out for a minimum of 105 of those.
Do that and you can deduct the entire cost of your mortgage interest from the revenue of your holiday home, regardless of any other income. Taxpayers on a higher rate often see notable reductions in their income tax bill as a result.
Choosing to invest in a property at Silverlake brings its own unique tax savings. Silverlake owners purchase a freehold plot and build contract, leading to a far lower tax bill than you could expect from the purchase of a ready-made holiday home, as you’ll pay no 3% stamp duty surcharge on the build.
Silverlake properties are designed to last a lifetime and be enjoyed by generations to come, but if you do ever come to sell yours, you may be eligible to benefit from Capital Gains Tax relief too. We have a resales team who, in the event you do sell your property, can support homeowners throughout the journey to make the process as smooth as possible.
To diversify your investment portfolio
A varied investment portfolio is a strong one. Diversity builds resilience, particularly in times of economic unpredictability like those we experience today, and adding property to your portfolio brings balance.
While the buy-to-let rental market remains strong, it is still heavily impacted by fluctuations in the property market. With rumours of a recession continuing to swirl, holiday home investment offers a softer alternative. The tangible nature of property as an asset can provide a sense of security to more risk-averse investors. Getting to enjoy your investment with your family, whilst simultaneously seeing the financial benefit of its returns, can be incredibly satisfying.
Investing for retirement
Whether you are already retired, actively planning it, or simply keen to make sure your earnings work harder whilst you are in employment, investing in a holiday home can have the potential for excellent long-term income. With the help of a holiday rental company, such as Habitat Escapes, you’ll often find that there is very little work involved in maintaining a holiday home too, leaving you to enjoy the free time retirement brings. With Habitat Escapes, our homeowners have access to on-hand housekeeping and maintenance teams to coordinate changeovers between stays.
Property continues to be a popular alternative to stocks and bonds for investment ahead of retirement, largely down to its capital growth. In the last five years, UK properties have increased at an average of 5% annually and while the property market has levelled in recent months, the potential for your property’s value to increase over time remains strong.
Of course, the further beauty of opting to own a holiday home by the sea as part of your retirement portfolio, rather than a buy-to-let property, is that you’ll have your own slice of coastal heaven to enjoy whenever you like.
Investing for future generations
The benefits of investing in property for future generations are two-fold. From a lifestyle perspective, little compares to the feeling of bringing together whole generations of the family, leaving the day-to-day behind to escape to the coast with the whole family. As the years pass, your investment can continue to provide holidays for generations to come.
On a more practical financial level, a property is a tangible asset that can be passed down as an inheritance. When this property can be classed as a furnished holiday let, conditions can be met that mean it qualifies as a business asset and as such can be transferred to the next generation without a capital gains tax liability.
So, whether you are planning for retirement, looking towards inheritance or simply keen for financial gain with lifestyle benefits, Silverlake offers a luxury holiday home investment that makes perfect sense - take a look at our available property designs and build your dream home today.