The UK is a traveler’s hotspot, with 37.5 million inbound tourists visiting during 2018. And 2019 is set to welcome even more travelers, as forecasters predict that 38.8 million will step foot into the country. As such, the UK has become a prosperous place for landlords looking to rent out the apartments they own on a short-term basis. However, you have the potential to earn even more cash by investing in a block freehold in the UK’s most popular locations.
What is a block freehold?
The majority of houses in the UK are freehold. However, you’ll find that many apartments and flats are leaseholds. When you invest in a block freehold you become the owner of the building, including all of the properties within it, as well as the land that it sits on. On the land registry, you will be recognized as the “freeholder” and you will also be listed as having the “title absolute”.
The benefits of block freehold investment
One of the biggest benefits of becoming a block freehold investor is that you won’t have to gain permission from any party other than the council when you want to complete work on your property. When you’re renting your apartment out to travelers, you want to ensure that it’s as comfortable and enjoyable as possible, so renovations are typically required. You’ll also gain as you won’t be required to pay ground-rent to anyone. This means you get to keep more of your cash. With that in mind, when you’re considering non-leasehold property, you should shop around for the best mortgage deals as this will help you yield the best return for your money.
Factors to consider
When you become a block freehold owner, you can charge any leaseholders living in your properties ground rent, maintenance fees, and annual service charges. However, if you’re purchasing your property for short-term rental purposes for travelers than, in most cases, these charges won’t be applicable. On the plus side, this is outweighed by your apartment rental costs, which, in London, can be as much as £220 per night. Alternatively, to benefit financially from both systems, you could split your block freehold into both long-term apartment rentals and short-term holiday apartments.
Block freeholds in the UK are becoming increasingly attractive to investors looking to rent out apartments to travelers. There are multiple benefits to owning such a property, however, there are some downsides too. It’s, therefore, advisable to thoroughly do your homework and to seek professional advice before parting with your cash.