Luxury Lodges are becoming a popular investment for many reasons. To start with, it’s a great way to diversify your portfolio and make money off the property in the long term. Secondly, luxury lodges offer good rental yield and capital growth potential. Finally, it may attract investors who would love to see it on their balance sheet. Here are the seven reasons you should invest in Commercial Luxury Lodge in the UK in 2022.
Luxury Amenities at an Affordable Price
Before diving into the topic, what does it mean to be a luxury lodge, and what amenities do they have? Luxury lodges are resorts or holiday homes located in rural areas where people can go for a vacation or other recreational activities.
They usually come with an indoor swimming pool, gym/spa facilities, conference rooms, etc., but these features vary from one place to another depending on the size of the property. The price of these properties also varies depending on their size and location in urban areas or remote corners.
In Scotland, for example, many luxurious properties are available at affordable prices compared to England because Scotland has less population density. Hence, it becomes easier for developers to build large-scale commercial projects without negatively affecting their environment.
Good for Capital Growth
According to the Office for National Statistics, UK, compared to the 65,000 air visits in April 2021, there were 2.2 million foreign visitors to the UK in April 2022. Eight hundred thousand trips to the UK were made for “Visiting friends or relatives,” being the most popular reason. It accounts for 37% of the total visits. “Holiday” came in second with 34% of the responses.
Your investment will grow and return more money to you over time, with little risk involved when buying a luxury lodge in the UK. That’s because it holds excellent capital growth potential when you invest in it. However, in addition to capital growth, it’s also essential to consider an asset’s value as a place to live or work.
Here’s why a commercial luxury lodge in the UK is a significant investment:
- It’s easy to find tenants for these properties.
- You can rent out rooms as hotel rooms or Airbnb rentals, which bring income on top of your mortgage payments and potential capital gains.
Better Rental Return
One of the reasons to invest in a luxury lodge and not a flat, house, or hotel is that you can get a better rental return. In addition, a luxury lodge will always be more desirable than any other type of property because it’s unique, whereas flats and houses are not so special.
Rental returns on luxury lodges are higher than they would be on flats or houses because they’re more desirable and command higher prices. You’ll also be able to get rent for more days per year compared with hotels, which only offer full-service packages rather than just rooms for rent. However, it makes them less flexible.
The high demand for these properties means less competition from other investors who want to sell them later, along with their tenants. In simple terms, it means fewer sales commissions.
Low-Interest Rates
As a business owner, you should know that low-interest rates are suitable investments. It is because the cost of borrowing money is less than it used to be. Therefore, individuals and companies can take on more debt quickly without worrying about paying back their loans.
Low-interest rates also benefit the economy as a whole. In theory, when low-interest rates are available from banks and other lenders, people will likely borrow money to make investments. It’s essential for them as they might not have been able to afford them earlier. Low-interest rates can also help people afford, which was not possible earlier due to high mortgage costs or other expenses associated with real estate ownership.
Tax and Legal Benefits
If you plan to invest in a luxury lodge, you must ensure that you get the tax and legal benefits. While it is true that there are many great investments out there, only a few of them offer such benefits. For example, suppose you invest in commercial properties like hotels or restaurants. In that case, there is a chance that your investment will not qualify for tax relief as they fall under the business property.
If your property is rented out for less than two months per year, then no capital gains tax exemption or annual exemption for rental income would apply to your investment. However, luxury lodges are considered residential properties rather than business ones as they are used primarily by tourists. Therefore, these buildings qualify for all relevant allowance schemes.
High Demand for Holiday Homes
It would help if you considered investing in a commercial luxury lodge in the UK for several reasons. First, the UK is one of Europe’s most popular tourist destinations. According to statista.com, the number of foreign visitors to the UK is expected to rebound in 2022 and reach about 26.7 million. On top of this, there is high tourist demand for holiday homes. Also, a significant domestic market for second homes and vacation properties is present. Businesses offering luxury lodges can access foreign and local clients willing to pay premium prices.
Also, as an investor, you can benefit from the low-interest rates applicable in the UK. In addition, there are low property taxes compared to other countries like France and Italy. Moreover, rental returns on commercial luxury lodges are generally higher than on residential properties due to their amenities. For example, a pool in a club can increase its value when given for rent.
Excellent Investment for Long Term
There is no denying that these luxury lodges are great for long-term investments. They can be used as a retirement home, a holiday rental, and an income-generating property which is always a plus. In addition, this investment is pivotal in investing in the future of your and your loved ones.
You may not be able to predict what will happen tomorrow or next year, but one thing is guaranteed. The value of luxury lodges will increase over time. If you buy one today, sell it ten years from now. It would gain value and appreciation, and the transaction will bring in much more than what was initially invested into it by its owners.
Luxury Lodge UK Is a Great Investment in 2022
Investing in a luxury lodge in the UK is an excellent investment. The demand for holiday homes is high and will only increase in 2022. So investing now will give you great returns on your investment in the long term.
The benefits include affordable luxury lodges with luxurious amenities and good capital growth potential. These also include better rental returns than other investments like stocks, mutual funds, and bonds. There are many reasons why investing in commercial property is a good idea, and this includes low-interest rates, tax, and legal benefits.