Is buying a caravan or lodge as a financial investment a good idea?
In a nutshell, NO!
If you have absolutely no intension of ever using the holiday home yourself and you are considering buying a static caravan or lodge as a financial investment which you plan will generate you a financial return then don’t. The figures just don’t add up.
Buying a static caravan or a lodge holiday home is a luxury lifestyle investment which can be expensive. Subletting is best used to help offset the expense of owning your own holiday home retreat and if you’re lucky, or work extremely hard at it, then you might generate a small return. If you think (or if you’re sold the idea) that by investing £30,000 in purchasing a static caravan you can generate £5,000 a year return for the next 10 years then you are kidding yourself (or being lied to).
Why?
Most parks that sublet do so from Easter through until the end of October, approx 30 weeks. The weekly income from subletting your caravan will vary from say £150 for a weekend break in the off peak season to maybe £700 per week during the peak 6 week school holidays. Over the full letting season using an average weekly income of £400, times that by the 30 weeks and this would equate to a maximum potential income of £12,000 per year, sound great doesn’t it? But you have to bear in mind that your caravan isn’t going to be occupied 100% of the time. Although occupancy might be as high as 90% in July and August, almost every park in the country would be more than happy if they could achieve 70% occupancy throughout the whole 30 week season.
Using this, very conservative, estimate of 70% occupancy this reduces your maximum earning potential to £7,000. Now deduct your costs i.e. your parks managed subletting fee (which can vary but is normally 20%+vat), cleaning cost (approx £40+vat per clean), your site fees, local rates, water, electricity, gas, TV licence, insurance, annual gas and electric safety tests.
- GROSS ANUAL SUBLET INCOME.............................£7,000
- Parks subletting fee at 20%+vat.............£1,645
- Cleaning Costs. 21 cleans at £40+vat......£987
- Annual Site Fees.................................£2,600
- Local rate and water...........................£300
- Gas and electric.................................£500
- Insurance..........................................£300
- TV Licence........................................£142
- Landlords gas certificate......................£80
- Electrical PAT tests.............................£30
- TOTAL COSTS.....................................£6,584
- TOTAL PROFIT......................................................£416
Well done you’ve earned £416, but don’t spend it all because that’s taxable.
Now just when you think things can’t get worse, please remember that your static caravan or lodge is a deprecating asset after 10 years you will be lucky if your £30,000 caravan is worth £5,000.
*when you go looking to buy a new or used static caravan or lodge be wary of the parks “Guaranteed Sublet Schemes”. This is a sales tool used to make the income possibilities look attractive to a new customer. By all means utilise this facility in year one, just don’t be surprised when you don’t achieve the same amount in subsequent years.
Static caravan and lodge holiday home ownership is NOT a financially viable investment.
Don’t get me wrong, I have owned a static caravan for many years and have recently upgrade to a lodge holiday home. Myself and the family love it. We feel it’s money well spent and a great lifestyle investment. We’d would, and do, recommend holiday home ownership to everyone we know, we just wish to help provide you with the facts to help you decided whether or not it’s the right thing for you and your family.
*please note the information provided in these articles are for information purposes only and represent the views of only one of our users. Please take independent legal advice before purchasing/implementing.
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