Need advice please. About four years ago I inherited a property, from my late mother, which we have been using as a second home for the family. Due to a change in circumstances, we would now like to let out the property as a Holiday Let and raise a mortgage against it, in order to do some home improvements on our main residence. We have been making some enquires, about how to go about setting up a holiday let and it has been suggested that we should talk to the local authority about a “change of use” and request commercial rates?
Any advice would be much appreciated. Sandy
Firstly, we ought to deal with your proposed request to the council to change use of the property to Holiday Let. This is both unnecessary and potentially damaging from a financial viewpoint. The value of any asset is derived from the use to which it is put and, if you apply for a change of use, you would be linking the property value to a small market and the income that it would produce only, whereas the current use appeals to the property market as a whole.
In fact, most owners of properties which have use other than Full Residential, often apply to have such restrictions lifted, in order to receive windfall uplift in value. Properties with these sorts of usage restrictions are often converted barns, churches, mills, in holiday destination areas, where the local authorities use them to protect the local infrastructure from being overloaded: schools, doctor’s surgeries etc. Therefore, most applications for a change to Full Residential usage fail. In addition, obtaining a mortgage on a property restricted to holiday let use becomes more difficult, because the standard holiday let mortgages offered off the shelf can only be secured on an unrestricted title.
In cases where use is restricted, we at Holiday Let Mortgages arrange a special commercial mortgage, at an interest rate that reflects the commerciality of the deal. So the conclusion is to leave well alone in terms of restricting the title and applying for commercial rates.
If you would like to speak to one of our holiday let mortgage brokers, in order to arrange a mortgage, to complete your home improvements, please contact the office today, and speak to Mark or Norman.