If you’re considering buying a holiday home that you may want to let out, it’s important to buy in a place where there’s an established demand for holidays, and Abersoch certainly ticks this box.
This former fishing port on the south coast of the Llŷn Peninsula is renowned for its beautiful sandy beaches, set against the stunning scenery of Snowdonia National Park, an area of outstanding natural beauty.
Over the years, Abersoch has become a property hotspot, with houses being sold for ever-escalating sums to second homeowners. 46% of homes in Abersoch are second homes, including holiday lets (BBC, 2021). Inevitably, the appeal of an Abersoch holiday has led to a boom in homeowners letting their properties, either as a self-catering holiday let business or for part of the season when they won’t be using it.
Keep reading to find out:
- What makes Abersoch a good location for holiday homes?
- Recent sold house prices in Abersoch
- Current rents achieved by Airbnb cottages in Abersoch.
- Comments from an estate agent and a letting agent
- The tax implications of owning a holiday property
- Examples of Abersoch holiday homes for sale
If you are thinking of investing in a holiday home in Abersoch, read on to find out the facts!
What makes Abersoch a good location for holiday homes?
- The fantastic setting makes it a winner – on a clear day, stunning views can be enjoyed across Cardigan Bay down to Pembrokeshire, along with mountain views of Snowdonia.
- It’s ideal for the whole family, offering safe beaches, a harbour, and plenty of attractions for water sports enthusiasts, from competing in Abersoch’s internationally recognised sailing waters, to surfing at Porth Neigwl, (Hell’s Mouth). There’s also horse riding, golf, and walking on the North Wales coastal path along the Llŷn Peninsula, enjoying spectacular views
- North Wales is accessible from many northwest towns and cities within an approximate 2-hours drive, making it ideal for weekend breaks as well as longer stays.
- There are many family-friendly holiday homes within walking distance of the village of Abersoch, with its shops, restaurants, and fantastic beaches, and these will bring in maximum rental returns.
- There’s a range of accommodation in Abersoch, from characterful former fishermens’ cottages to easy-to-maintain new-build developments, all with potential as holiday homes.
Recent sold house prices in Abersoch
Prices have risen sharply over recent years, making investing in property there a big decision; if your aim is to make money from a rental property, a careful assessment of the potential rental income will be needed.
According to figures from Rightmove, the average property price in Abersoch over the last year is £689,753; overall sold prices were up 7% on the previous year and 41% up on 2017’s market peak of £488,873. The average price for a detached house was £912,000; a terraced house was £392,000 and a semi-detached home was £375,000.
Zoopla’s figures for the past year put the average price for a detached house at £803,200; a terraced house at £398,600 and flats at £260,315.
This table illustrates the increased sale price of a selection of individual houses sold in Abersoch over recent years. (Information from Rightmove).
|Detached house||£975,000||May 2022|
|3 bedroom terraced house||£390,000||February 2022|
|4 bedroom detached house (new build)||£1,320,000||Nov 2021|
|2 bedroom terraced house||£360,000||Sept 2021|
|3 bedroom detached house||£390,000||Feb 2022|
Comments from industry professionals
The residential market is buoyant, according to the senior branch manager of Beresford Adams estate agents in Abersoch, Martin Lewthwaite. He said:
There is certainly a good number of buyers in the area. While we are not as manic as last year because of the effects of Covid-19, things are steady, and we are not noticing any changes as yet resulting from the mortgage rate increasing or interest rates.
We are seeing a lot of people moving here at the moment, some to live here permanently, and local people are also buying successfully. People are buying second homes, either as investments or for their sole use – there is interest across the board.
Buying a holiday cottage is a big financial commitment and managing it as a holiday let will require a considerable amount of time or the services – and costs – of a letting agent. However, according to Sykes Holiday Cottages’ Holiday Let Outlook Report 2022, the average holiday let owner earned £28,000 in revenue from it last year, up from £12,000 in 2019.
The future market for holiday cottages appears buoyant; Sykes’ Staycation Index 2022 (published in July), reveals that the British are continuing to holiday in the UK and the current airport disruption has led to a surge in last-minute bookings. 77% of us plan to enjoy at least one holiday in the UK (up 75% from last year) and 45% will choose the UK for their main summer break. However, while Sykes has seen a 30% increase in bookings this year so far compared to 2021, 50% of holidaymakers plan to go on fewer breaks than they normally do, as the cost-of-living crisis bites.
Sykes’ findings prove that Abersoch is a year-round destination, with healthy Christmas and New Year bookings. North Wales emerges as the most popular region for autumn and winter 2022 bookings, and it’s been the most popular region for summer bookings for two years in a row, overtaking Cornwall.
Bev Dumbleton, chief operating officer at Sykes Holiday Cottages, gave four key pointers to ensure a successful holiday letting.
1. Location. As true as it may be for traditional real estate, location for holiday homes is just as important and is one of the biggest deciding factors for potential holidaymakers. While some things may be obvious – fantastic beaches and the countryside will always be popular – there are more nuances to consider. Think about your target audience. If you want to attract larger bookings or families, you need to have a property that can accommodate that as well as offer amenities close by.
2. One of the hardest challenges is finding a way to make your holiday property stand head and shoulders above the competition. Professional photographs can dramatically improve the appeal of your property. Little extras like high-speed Wi Fi or perhaps a pizza oven always go down well.
3. Holiday lettings require constant upkeep. This means budgeting in either your time or your money to make sure it is kept in order. From cleaning companies to handymen, eventually, your home will need their help, so do the research and find the best rates.
4. Decide on your rental rates throughout the year. Think about your seasonal pricing, considering demand around school holidays, bank holidays, or any key events in your area. Breaking this down week by week will then allow you to ensure demand is well reflected in your pricing.
The self-catering holiday cottage marketplace is competitive – holidaymakers are discerning and willing to pay for good quality accommodation, so it may make sense to install attractive features. Adding items such as a hot tub, games room, and a log burner will also extend a property’s letting season. Family-friendly accommodation benefits from also being pet friendly, especially with the increase in dog ownership, and an enclosed garden is ideal. Currently, the top three things that people want in self-catering holiday cottages are a garden and outdoor space, proximity to a beach, and free Wi-Fi.
Current rents achieved by Airbnb holiday cottages in Abersoch
This 2-bedroom cottage on the popular Cae Du estate in Abersoch village sleeps four people. It has one bathroom, a sundeck, communal gardens, and is a five-minute walk from the beach, shops, and restaurants. It lets for £118 per night through Airbnb or £965 per week including a £140 service fee.
Bryn Afon Studio is a one-bedroom cottage in the heart of the village. It has one bathroom, a parking space, and lets for £69 per night, or £561 for seven nights including a service fee of £81.
Sleeping 6 people, this three-bedroom house is close to the beach and has a private garden and two bathrooms. It lets for £153 per night or £1,296 per week including cleaning and service fees of £228.
Deudraeth is a detached dormer bungalow on the Bennar headland, with fabulous views across Abersoch harbour. It has a kitchen, breakfast room, living room, dining room, and bathroom and sleeps eight. It can be rented for £225 per night or £1,842 for 7 nights which includes a service fee.
The tax implications of a holiday home
The Welsh government is introducing stricter rules on holiday homes’ eligibility for paying Business Rates rather than Council Tax. Second homeowners in Gwynedd are now paying a 100% premium on their Council Tax bills, and councils will be able to charge a 300% Council Tax premium from April 2023. The rules allowing self-catering accommodation to pay Business Rates rather than Council Tax are also changing next April. To be able to qualify for the lower Business Rates tax, a home would need to be rented out as a holiday let for half the year. Gwynedd Council says the premium will help build affordable homes for local people (BBC, 2022).
Under the new rules, holiday homes must be let out for more than 182 days a year and be available to let for at least 252 days a year to qualify for Council Tax exemption and pay Business Rates. Currently, any holiday home which is let out for over 70 days a year and is available to let for over 140 days a year qualifies.
According to the Welsh government, the change is designed to prove more clearly that the properties concerned are being let regularly as part of a genuine holiday accommodation business, and therefore contribute to the local economy (Gov.Wales, 2022). It’s advisable to bear in mind that Government policy on the taxation of second homeowners may change in the future.
Furnished Holiday Letting (FHL)
The interest in holiday homes caused by Covid-19 and the staycation trend, and the high prices achieved for holiday rentals have led to many second homeowners `flipping’ their property into becoming a commercial holiday let business, allowing them to make use of tax reliefs. To qualify as a Furnished Holiday Let, the property must meet criteria regarding availability, actual bookings, and be furnished for normal occupation.
Furnished Holiday Let tax benefits
Capital allowances can be claimed on the property purchase, construction, or renovation, and on goods such as fridges, televisions, and furniture.
To qualify for capital allowances, you must prove that you:
- Are a FHL for tax purposes.
- Pay UK tax
- Invested over £100k on buying the property, building or converting it.
- As income from a holiday let counts as `relevant earnings’ for pension contribution purposes, tax-advantaged pension contributions can be made.
- Capital Gains Tax relief can be claimed on the property as it’s a trading venture.
Other reliefs include rollover relief; holdover relief, and if the property is owned jointly, you may be able to split the profits for tax purposes with a partner.
What can be claimed as expenses?
As a business, expenses can be offset against the income from a holiday let providing that:
- They are claimed against commercial use only (not against private use)
- They are not capital expenses i.e., one-off payments for purchase, construction, or improvement costs.
- Expenses can include utility bills, interest on loans relating to the property, letting agency fees, advertising costs, and cleaning/maintenance costs.
Holiday homes for sale in Abersoch
Lon Sarn Bach
This deceptively spacious four-bedroom barn conversion is in a quiet location, just a short drive from the village of Abersoch and its great beaches. It has rural and sea views, three bathrooms, and would make a great self-catering holiday property. It’s priced at £575,000 with estate agent Beresford Adams. Features include limestone flooring, double glazing, and propane gas central heating with underfloor heating to the ground floor. There is off-road parking.
3 Afon y Felin
Offers in the region of £600,000 are sought for this modern four-bedroom terraced house at the boatyard in Abersoch. Close to the harbour beach, this family-friendly house has an open plan living and kitchen area, a washing machine, private decking space, and three bathrooms. It would make an ideal self-catering holiday cottage, being perfectly located for Abersoch village, and it’s being sold fully furnished through agents Elvins.
Cae Du Estate
Situated on a popular residential development, this studio-style, upside-down two-bedroom cottage has an open plan first-floor living/dining area, galley kitchen, and a south-facing balcony. Both bedrooms and the bathroom are on the ground floor and there’s also a loft room conversion. It’s a minute’s walk from the village amenities and Abersoch beach and has off-road parking. It’s on the market with Beresford Adams, priced at £385,000.
B9 The Warren
This three-bedroom chalet bungalow on The Warren holiday park was recently refurbished in 2021 with a new kitchen, floors, carpets, and doors throughout. It offers open plan living, a family bathroom and ensuite shower room, and access to the various leisure facilities on the holiday park which is operated by the Haulfryn group. There is a family-friendly, large decked area for sun worshippers, with countryside views. The Warren has its own beach with spectacular views overlooking Cardigan Bay and is a short drive from Abersoch village. There is off-road parking. A 20-year license on the chalet expires in March 2035. It has a guide price of £240,000 and is being sold by Elvins.
Over to you
Have you invested in a holiday property in Abersoch in recent years?
If so, how easy have you found it to manage?
We would love to share your experience with our readers, so please leave a comment below.
BBC. 2022. Second homes in Wales. [Online]. Available here (Accessed 25th July 2022)
Gov.Wales. 2022. New tax rules for second homes. [Online]. Available here (Accessed 22nd July 2022)
BBC. 2021. Second homes: what are the issues in Wales? [Online]. Available here (Accessed 25th July 2022)