How do you value a property with a holiday use restriction?

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ianh100
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Location: Sherborne Dorset

How do you value a property with a holiday use restriction?

Post by ianh100 »

Hi All,

There has been some discussion here on how to sell a holiday let. We have an existing property with a holiday use restriction, it is very poorly defined. It has not restrictions on length of stay, just that it can't be a permanent residence.

We are considering another property but are unsure how to value the property to make a fair offer. We are happy we could get a good rental return but concerned how easy it would be to sell if and when we wanted to. The increase in stamp duty and restrictions on mortgage lending are going to make this more difficult.

Has anyone else been through this recently? I would appreciate your thoughts.

Thanks
costa-brava
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Post by costa-brava »

Ian you posted this a couple of months ago but have not had any replies. The answer is basically the same as one I have just answered for France.
My son is currently buying a house in Sheffield as buy-to-let not for hol-let. He agreed a price provisional on bank valuation. It is the nicest house in the street. The valuator just took the last few sales figures for the street and went for the average. So he is now re-negotiating the price downward.
Nowadays you get up to date property sales prices online in the UK and the price will not vary much from that.
So if you are looking at a property just pop the address and postcode into google and you'll get a fairly accurate valuation.
There is no added value for anything that is a "holiday business". If you look at a property that changed hands in the last 5 years the current price will not be a million miles away from the last sale price.
What you see is what you get!
That is more difficult here is Spain where the old habit of registering the sale at a bogus figure has not totally died out and so the online register of sales hasn't happened yet.
ianh100
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Joined: Thu Jan 10, 2013 4:37 pm
Location: Sherborne Dorset

Post by ianh100 »

Hi, Thanks for your reply. My question was more about how much lower the property price would be due to the planning restriction. I absolutely agree that it would not add value being a business, it was more a question of how much less.
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Nemo
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Post by Nemo »

My park is building new properties. The last two that have been built have had their price hiked by £5k suggesting despite holiday let restrictions, the market is buoyant. Mind you the restriction is ignored by both parties and the planners won't do anything regarding enforcing it in our neck of the woods.

You can only value it in what it's worth to you and how low an offer the vendor will accept. What the future holds is anybodies guess. After all, property is not a short term purchase unless you're in the property game and know how to play it?
newtimber
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Post by newtimber »

You would get a better price if you could get the restriction lifted. Have you spoken to a planning consultant as to whether it might be possible?
ianh100
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Joined: Thu Jan 10, 2013 4:37 pm
Location: Sherborne Dorset

Post by ianh100 »

Hi New Timber,
One owner tried to get the restriction lifted last year but I think they went about it the wrong way. I may talk to a consultant to see as the local council have lifted some other restrictions. It doesn't bother us today as we want to run it as a holiday let for many years. Our concern is just the difficulty selling at the time we may way to do so.

The restriction is so loose there is a strong argument that it is not enforceable. They did try to enforce it to evict someone living there but they lost the case. There are no time or date restrictions is just says "for holiday use".
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