‘We spent £400,000 turning an old vicarage into a luxury holiday let’

May 06, 2023

They used to say Britain was a nation of shopkeepers. Now it seems we’re a nation of holiday-let owners. Last year a BBC study found that the number of holiday lets in England rose by 40 per cent in three years, from 19,543 in 2018 to 27,424 in 2021.

Data analysts from AirDNA put the numbers even higher. They estimate there are 290,282 holiday lets in Britain, based on listings on Airbnb or Vrbo, up 34 per cent from 2018. It says holiday-let owners earned £6.91 billion last year, up 54 per cent from £4.5 billion in 2018. Yields of 8 per cent to 10 per cent are common, particularly in Cornwall, the Cotswolds and the Lake District, according to Mortgages for Business, an independent broker.

Phil and Claire, a couple from Mossley, Greater Manchester, wanted a piece of the action. Phil, 54, started his career in textiles as a manager for Courtaulds and more recently owned a small business for selling on the internet. Claire works for the NHS.

"We started looking at smaller properties, two or three bedrooms, which would have been great [long-term] investments, but they didn't generate income as well," says Phil, who was looking to extract a salary and then a good pension from the property portfolio.

So he started searching for bigger properties and asking estate agents to see the draft accounts. When they stumbled across the Old Vicarage, an 1864 gothic pile six miles from Wasdale, in the Lake District, it seemed perfect. The former B&B had ten bedrooms and was in the western area of the district, which Phil feels is more unspoilt than the tourist honeypots of Windermere and Ambleside.

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They bought the property for £400,000 in August 2020. Keen to start the renovations, they had a rude awakening: when they tried to transfer from their bridging loan to a mortgage, the lender informed them they would need planning permission to turn the property into a holiday let because it slept more than six people. "It was a scary moment," Phil says. "By chance there’d been a number of test cases put through the Lake District planning department for B&Bs in Keswick that had transferred over to holiday lets. They had gone through, which paved the way for us. Within four weeks our planning permission was rubber-stamped."

He was confident he wasn't taking away a house from a local family. The property had been on and off the market for four years before they bought it. "This property should be a holiday let because it was already a B&B. It's too big to be a family home: the original vicar had a family of six and ten servants all living here."

It's no wonder the house sat on the market. The renovation was meant to take 12 months but in the end took almost three years and £400,000. The previous owners hadn't run it as a B&B for years and lived only in a few rooms. The roof was leaking and rotting, as were the windows. Water was coming down the walls and the garden was so overrun with bamboo and brambles they couldn't access the outbuildings. The previous owners ran lights from gas bottles. Floors were plagued with woodworm. Heating comprised storage units.

Twenty layers of paint had to be stripped without damaging the pitch pine woodwork, an incredibly complex job that took 12 months. Phil hired one labourer, but undertook most of the work himself, using experts where needed: to install new electrics, plumbing and a biomass boiler to feed cast-iron radiators. Phil would leave Manchester on Friday to work on the house and return home on Tuesday evenings to help look after their three children. "It's been very hard," he says.

During the winter, when the temperature plunged to minus 6C, he slept in a sleeping bag on an ex-army camp bed and wore a balaclava to keep warm. He had to have sponge baths. "The hardest part was getting out of the sleeping bag in the morning."

The first guests arrive this month and Phil is hoping his Herculean efforts will pay off. He's pulled out all the stops in terms of luxury. "The holiday-let industry is becoming so competitive. Investors are throwing money at their properties. To give yourselves a fighting chance, you’ve got to create something better than anybody else's."

To that end, on the top floor they removed four bedrooms (there are now six in total) and created a deluxe cinema room, a games room and a coffee lounge. "We could have had the extra bedrooms. But I thought: how would holidaymakers entertain themselves on [rainy] days, what would be something children wouldn't experience at home?"

Their cinema room could compete with an Everyman. It has Dolby Atmos technology that generates sound from all angles, a 4k projector and a PlayStation 5. The six cinema seats are from Infinity Seating, which supplies picture houses around the world.

For lighting with a wow factor, he installed programmable LEDs that change colours and operate by remote control. Two companies quoted him £2,500 but he bought all the parts himself on eBay and Amazon for £500.

Next came the games room: it has a bar football table, a jukebox with a karaoke machine and pub quizzes, and a retro arcade machine that has 15,000 games including Pac-Man and Space Invaders. "I do spend a lot of time up there myself," Phil confesses.

The cinema and games rooms are linked to a coffee lounge so that the adults can keep an eye on the kids. "It has a Jura X8 coffee machine, with a milk fridge so you don't have to keep going downstairs, and a wine fridge."

To go the extra mile, Phil converted the old pigsty into an undercover barbecue area. It has a gas barbecue, sink, dining area, firepit and a hot tub. Their holiday-let company, Luxury Cottages, helped them to negotiate a chunky discount on high-end Hypnos beds and mattresses. The living room has a piano for singalongs, and if nobody can play, it plays by itself. "It's a Roland KR-15. It's a £10,000 piano but we bought it for £1,200 at an auction on eBay."

Posh appliances by Siemens, Bosch and Neff — two dishwashers, three ovens, a washing machine and dryer, an American fridge freezer, an induction hob — were snapped up on the auction site i-bidder.com. "All of the appliances should have been £15,000. We paid £5,000."

Phil hopes all the fancy names will pay off. "If we hadn't created something fantastic, we might have struggled to get bookings."

So far they are mostly booked over the summer. The house costs from £500 a night. They also have two outbuildings they might convert for future lets. "We’d like to move into this business for the long term. We’ve got a ten-year plan based on an annual turnover of about £250,000. For the first ten years, we’ll draw a small salary and use the balance of whatever is left to pay off the property. We’re on an interest-only mortgage and hope to be mortgage-free in ten years. Then we’ll be able to draw down as much money as we require to put towards a pension."

They’ve been hit hard by the rise in interest rates. They were paying £2,500 a month and are now up to about £4,000. "We’re on a commercial mortgage at a variable rate, which is now on 8 per cent. So we’re going to pay a penalty and switch over to a specialist holiday-let mortgage, at a two or five-year fix, for about 5 per cent."

Was he worried by Michael Gove's recent pledge to make second-home owners apply for planning permission to run holiday lets in a bid to help locals get on the property ladder? "I thought it was good. It will just mean that the right properties are made into holiday lets."

The Old Vicarage is particularly suitable for a holiday let, Phil insists. It has no close neighbours and, given its sheer size and age, it would have been difficult for one family to be able to afford the upkeep and the energy bills. It makes more sense as a business and is a good way to save historic houses.

Increased regulation of holiday lets is long overdue, he adds. "There needs to be more control. The legislation will mean if people develop a holiday let, they will do it professionally, to a high standard. They’re not going to just convert a house and throw some more beds in it, so that people have a mediocre experience. We’ve put a lot of money into this to make sure that people have a quality experience."luxurycottages.com