UKH

If you had money for a deposit on a house, but didn't need a house. Was interested in the outdoors in the UK and abroad. What would you do?

Buy a house to rent out and benefit off the disposable income? Or, purchase someone in an outdoor recreation location and benefit from airbnb'ing it out to also give yourself a base location for some of the year. (thinking somewhere like North Wales or maybe Chaminox). 

An interest to piece to see how some people would spend their money? 

In reply to Reader_Rambles:

I am sure purchasing someone and renting them out is illegal. Sounds like people trafficking and pimping.

In reply to Reader_Rambles:

Much more work than perhaps you realise to run a holiday let/air bnb. Licensing requirements in many areas, maintenance, bookings, dealing with disgruntled guests etc etc it isn't free money. Easier if you live on site and maintain it yourself obviously.

If you're time rich sit in an armchair and make shrewd investments

In reply to Reader_Rambles:

I’d buy a house somewhere I wanted a home, but I think you’re asking how I would sweat a property asset. I always fancied a property in a ski destination, I suppose. Christmas, two-weekers, long weekends. I think I need to live fairly close to a rental property having been burned in the past. I’m not really helping am I?

In reply to Reader_Rambles:

I had that kind of money in cash once. I didn't have a house

I blew every penny on several massive journeys / travels all over the world. I ended up broke a year later. Never regretted it for an instant then, or now. Best thing I ever did

In reply to Reader_Rambles:

I inherited enough that I could have put a sizeable deposit on a property for a buy to let or AirB&B. I thought about it and decided that morally I just couldn't do it. There is a housing crisis in this country that is really not helped by rich people buying up properties so they can make a living off them. 

In reply to Hooo:

Rather than go down the Airbnb route could you not rent a property out at an affordable rate? I know there are all kinds of downsides to being a landlord but there seems to be a major lack of decent affordable rental property right now.

In reply to Lankyman:

That's certainly a possibility. 

I am neither of these positions, but it came up in a conversation at work today and I know someone who is in this position and toiled with buying a place in North Wales or Chaminox.

If I was in this position, I wouldn't want to manage a property as my job would not allow me to be located local to the property. However, the thought of a disposable income is appealing. The thought of having somewhere I can go and stay at during a period of time I want, storing my own stuff in is an attractive thought. But I don't want to fall into that second home category even though it would be my first and only home, though I have accommodation offered through work. 

In reply to Hooo:

I personally see holiday rentals as far less damaging than second homes, as being occupied for much of the year means they bring tourism (and therefore jobs and money) to the community.

In reply to Lankyman:

There's a real challenge with this, that if you're letting a property below the market value then it presents an opportunity for your tenant to sub-let (illegally) at a higher rent, in which case there's no net good being achieved.

This isn't inevitable, and is probably easier to avoid if you live nearby and have a relationship with the tenant, but just to make the point that even with good intentions this seemingly-simple solution has drawbacks.

To the OP - it depends if you just want to get richer, or want to spend the money somehow. As others have said, spending it on travelling and experiences seems a pretty good way to go.

Similarly I was in this position about 10 years ago, had enough saved between my partner and I for a house deposit. We quit our jobs and travelled the world for a year, neither of us have ever regretted it in the slightest and we look back on the memories fondly. 

In reply to Lhod:

This was me over thirty years ago except I already owned a house and sold it to fund a year travelling. There has been the odd twinge of 'if only' but nowhere near enough to matter much. Now, when age and health are both kicking in it's far more satisfying to have done things then than wait until it became next to impossible. You'll never hear anyone croak 'I wish I'd bought that house' on their death bed.

In reply to Jenny C:

Some are, some aren't. Many are occupied the 15 or 16 key weeks of the year, then it's often only on the weekends in between. If you want a place mid November for a week you're often spoiled for choice. 

Where do the people who work in low paid tourism live if a person's 'holiday' rental cost £200+k? 

In reply to Reader_Rambles:

put it in a personal pension. by the time you are 65yrs  £20,000 would grow to £65000 and with annual drawdown you will have £5350 per year on top of your state pension forever.

if you expect to need it sooner than that then there are high interest investments that return 8% over inflation.

That will leave you free to meet your climbing goals and also provide funds for what you might want in later life.

In reply to Jenny C:

I guess they are, but they probably still help to make it too expensive for locals to be able to buy a home in the same way which second homes do, or a similar way. Coming from comfortable middle class roots, I've often been struck by the apparent wealth difference between family friends and locals in some of the parts of the Lake District I've been to on walking holidays while growing up.

In reply to mutt:

This would be good advice if only you could guarantee that you have the same health and fitness at 65 as when much younger. If I'd followed this route I'd be much better off financially but probably full of regrets for not having travelled to far flung places. I haven't got the energy to do it now (I'm old and a bit fagged out by covid).

In reply to Lankyman:

Or, delete all social media to avoid the noise, buy a motorhome, fill it with toys, travel weekly. 

In reply to Lankyman:

When on a trek to Nepal, a 19 year old ask my Dad and a family friend if what an older guy was saying was true, if one can only get to do cool things when older and rich, and they both pretty much said 'Find a way to make stuff happen now, while you're young and able'.

The 19 year old had sold his car to go on the trek, which seems like the right way round. I've spent a lot of my youth unpicking mental health tangles, but plan to do things now I'm more able...

In reply to mutt:

Really? A link to these would be welcomed.

In reply to Reader_Rambles:

Buy a house and keep a bedroom for yourself. That way you are pretty much forced to make it affordable.

In reply to Reader_Rambles:

Go skiing.

In reply to Hooo:

Yes - one of the reasons I didn't keep my house as a rental property when we got married.

I also made sure I sold it to someone who was going to live in it and not a landlord to rent out.

In reply to Reader_Rambles:

I'd stay in hotels. I used to think how lovely it would be to finish a day on the crag by repairing to the bar in the Old DG, the Wasdale Hotel or The Lodore Swiss Hotel etc. They are not the same as they were 60 years ago, but it's still a great way to do mountains. 

Or I'd stay at a favourite old style B&B, or guest house. If you can afford two houses you can afford to stay in a hotel and you can pat yourself on the back at giving employment in the locality and not occupying all the starter homes.

In reply to Reader_Rambles:

Give some more context.

Do you already own a primary residence?

Are you working?

How old are you?

In reply to Hovercraft:

https://customerdashboard.aegon.co.uk/content/guides/guide-to-choosing-a-fu... 

unfortunately you need a login to see the fund summaries. However a trivial internet search will demonstrate that investment funds return on average (over a lifetime) 8% and that is calculated after inflation. Do a bit of googling. This isn't a bank account or savings account but you can wrap these investment funds into a SIPP pension or an ISA to avoid tax.

In reply to Hovercraft:

https://www.morningstar.co.uk/ will show the fund performance over 5 years. You'll have to hunt through them as there is no way to seach on return. A quick look shows there are funds that have returned 23% over the last year. 

In reply to Hovercraft:

https://www.morningstar.co.uk/ will show the fund performance over 5 years. You'll have to hunt through them as there is no way to seach on return. A quick look shows there are funds that have returned 23% over the last year. 

In reply to mutt:

Equally, there are funds that will have lost 23% over the same period of time, or that fund that made 23% last year lost 23% the year before.  Nothing with any sort of sensible risk is going to be returning as much as 8% above inflation in the long term, indeed the STEP benchmark for 'medium risk' investments was 6.22% for 2023, 2.22% above inflation in the UK.

https://www.mpindices.com/reports/#/(reports:performance/summary)

In reply to Reader_Rambles:

I think I'd buy a vehicle I could sleep in.

In reply to Reader_Rambles:

Take a career gap year and spend it all travelling the world.

Been there, done that, loved it.

In reply to Toerag:

ye fair enough but isn't this actually an average over 1000s of investment funds. Whereas the OP would be in just one fund. Also the 5yr discrete perfomance in that dataset includes the highly unusal year where all assets declined by 10% due to covid. Excluding that is questionable but if you are investing over 35 years the effect of a once-in-a-century event is going to be much smaller. Anyway the average of the discrete performance over the other 4 years for a adventurous portfolio in that dataset is10.96%. 

And in any case the cummulative return is what matters. The choice faced by the OP is either take a holiday now, or take 3 holidays in 30 years time. Or to put it another way.: Take a holiday now, carry on with that for the next 10 years and then find that the OP can't live off the state pension for the last 40 years of the OPs life. Thats an awfully long time to live with the heating off.

Plus of course holidays/houses etc are taxed. Pensions are not. So if the OP puts his money in a pension investment he can claim tax relief and thereby recover all the tax he paid accumulating his savings. I assuming the OP is a basic rate taxpayer here but any money put into a pension from savings grows by 20% immediately. If the OP buys a holiday they've already paid 20% in tax and will pay another 20% in VAT. That isn't really a great investment strategy now is it!

Before tearing this apart in the usual UKC way just take a moment and thing Is it really unusual to prepare for retirement from your first job? I think everyone does this. I'm not advocating anything unusual here.

In reply to mutt:

Sounds like you need a holiday mate

In reply to mutt:

It's often wise to save something for the future, to begin to, I managed to save up 3k while living with my parents, and then spent most of it by dipping in and meaning to pay it back, and have always vaguely kicked myself for it, I figured it was a truisim about it being easier to save up than it is to pay savings back, but it seems to be true.  

In the end it's about whatever brings one peace of mind, it's hard to be chilled with a too uncertain feeling future, one can seek an escape into headonism and intoxicants, by persuing distractions generally...

In reply to Reader_Rambles:

We've considered a holiday home in Europe but haven't committed yet, maybe when the kid is older it could be an option but for now, I doubt we'd get the use out of it, it would end up being an air Bnb with more hassle.  

We're doing a barn conversion here which is almost complete now so that'll become a holiday let and at least give us some experience of the realities of operating one. Other than that I'm buying up some more bog standard BTL's to add to the portfolio Ultimately, I don't want to be rich I just want enough passive income to live comfortably and then I'm effectively on holiday permanently.    

In reply to Lord_ash2000:

Given there is a shortage of affordable housing, what are your thoughts about your BTL's which could be other people's family homes, if they weren't being used as BTL's to support somebody else's time spent being on holiday?

What are your thoughts on the morality of this?

In reply to Lord_ash2000: I've  a few friends who talk about owning their own home being 'the dream', I can guess it's the same in the Lake District too.

https://www.lakedistrict.gov.uk/planning/planningpolicies/affordablehousing

''The lack of affordable housing is a national issue, but the need is even more acute in the Lake District National Park.''

There's been studies which find that people age more quickly biologically when living in rented accomodation, compared to where they have a mortgage or own their home outright. I think any functional moral compass would need to consider such aspects as this, where living off the earnings of BTL's well enough to live as if always being on holiday.

In reply to Lord_ash2000:

https://www.understandingsociety.ac.uk/news/2023/10/11/renting-a-home-linke....

''Renting vs home ownership: The analysis showed that living in a privately rented home was associated with faster biological ageing. What’s more, the impact of renting in the private sector, as opposed to outright ownership (with no mortgage), was almost double that of being out of work rather than being employed. It was also 50% greater than having been a former smoker as opposed to never having smoked...''

In reply to Timmd:

Interesting that it notes "Living in social housing, however, with its lower cost and greater security of tenure, was no different than outright ownership in terms of its association with biological ageing once additional housing variables were included."  

A lot more needs to be done to reduce or regulate the private rental market and increase the availability of affordable social housing. 

In reply to TMM:

I do not own a property at the current moment and I will likely not do so for another 12 months. 

I work full time, in the military as an officer. So I can travel around for free and get my climbing, hiking, and mountaineering fix pretty easily through work all paid for. I have just done 4 weeks; week 1 Isle of Skye, week 2 & 3 Switzerland and then week 4 North Wales. 

I am 27. 

In reply to Reader_Rambles:

Did you actually want advice about what to do with your money, or was this just an elaborate excuse to boast about your paid holidays?!

In reply to Luke90:

Actual advice. Yes I am lucky to be in a position to do my hobby during paid work but thats the benefit of the job which anyone can sign up into whether it is regular or reserve. 

Genuine advice about what people consider to be a good thing to do with my money? I am fortunate that I have accommodation provided for me, but on the other hand I don't get to choose where I want to live. 

I would like to purchase a property in North Wales as my home, but then I end up having a house which is empty. So a chance to holiday let it out, which means when I am off work I have a home I can go to. It also provides me a small income and it means I have not left a house empty in a place I would like to call home. It would be nice to have it set up so I can store my items there in a secure section of the house, while it is let out as a holiday home to people. But it would be my own property.

I could purchase a home near where I grew up, but I don't want a home there and again it would sit empty for 70% of the year. 

I have thought about purchasing a house in somewhere like Chaminox (but not Chaminox) possibly Zermatt but then it would sit empty for longer periods throughout the year.

I am in no rush to purchase anywhere as I am due to go abroad for 12 months, to which I would likely purchase somewhere on my return. It would have to be somewhere in a national park like the Lakes, North Wales or even up Glencoe/Cairngorms, or even Pembrokeshire (I lived there for 2 years) for my own personal preference. I would be able to spend 2-3 weeks in the house around 4 times a year, which leaves me in a predicament as what to do with a asset which I would be paying for (mortgage, bills), for the periods I am not there.

In reply to Reader_Rambles:

Having once been in a slightly similar position (& I am ignorant of the tax implications of these actions for you) I would:

• Put half into the best small flat in the best part of (say) London & rent it out
• Put the other half into some sort of insurance-based savings product

I didn't, but I wish I had.

These are dreadful short-term choices. In 20 years time, when you might well be retired they will seem inspired.  If you avoid death or injury as a result of your occupational activities you'll have had 20 years of decent recreational climbing & you'll have the financial means to underpin another 20, 30 or 40 more years of the same.

My tuppennyha'worth.

In reply to Reader_Rambles:

Your circumstances may change in five years time so you might need that deposit to buy a house.  Tuck it away for that time. 

In reply to Reader_Rambles:

You haven't mentioned what your timeframe is? 5, 10 years or longer? All of your options will involve work and you may find that your dream of spending 2-3 weeks 4 times a year there will involve several of those weeks sorting out maintenance jobs. If you're just buying a single house to rent out it's not going to provide much "disposable income" after costs and tax. If you don't need the money for 5+ years have you looked into maxing out your ISA allowances and feeding into low-cost tracker funds so you can grow your money free of tax?

Having a holiday let in Wales has probably had its day. The market is absolutely saturated with them. For example, in my area of South Wales, a popular holiday resort, there are 60 "entire homes" still available to book for the August bank holiday on airbnb.

In order to qualify for business rates then the property needs to be let for at least 182 days and available for 252 days per year. There's then the issue of double-treble council tax if you are ineligible for business rates. There is an exemption for military personnel living temporarily elsewhere for the council tax premium - but the house needs to be your main residence so I'm not sure that running a holiday let business would count. You'd need to get advice.

From September of this year you're also going to need to get planning permission to turn a house into a holiday let. Given the market saturation and unpopularity of holiday lets I suspect this will be a major hurdle. 

In reply to mik82:

Sounds like a good idea. Is that a Welsh thing or UK-wide?