Luxury Lodges

Do holiday lodges lose money?

We’ve had plenty of time to reflect on our lives during the lockdown, and let’s face it, most of us have had enough of being locked up in our houses for weeks on end. It’s no surprise, therefore, that we see a lot of stories regarding vacation houses.

To be honest, the notion of having a secret hideaway to escape to for long weekends and vacations has become more attractive in recent years. But two things turn me off.

For starters, second houses are bad news for locals who are trying to purchase their first property. In some places, the absence of affordable housing exacerbates inequity and divisiveness.

The expense is the second factor, which comes as no surprise. House prices in the United Kingdom were already extremely high, but they increased by 13.4% in the year to June. Of course, the end of the stamp tax vacation may hurt pricing, but it remains a seller’s market for the time being.

Holiday lodges are not only less expensive than homes, but they are also a less controversial type of second-home ownership since they do not influence local property values or harm local people.

Several holiday lodges promote themselves as a socially responsible option. So, the question is “do holiday lodges lose money or not?” Let’s find out in this article. 

The fact that a holiday lodge depreciates as it grows older is one of nature’s basic laws. You may start knocking pounds and pence off the initial worth of your brand new holiday lodge as soon as you open the door.

Attempting to stop this devaluation is, however, as useless as trying to stop the flood. You can bet that it will happen regardless of what you do. You can control depreciation and get the most out of your holiday lodge purchase by knowing how the value of your caravan diminishes over time.

How fast will the value of my holiday lodge depreciate?

A holiday lodge’s depreciation rate is comparable to that of a vehicle. This equates to approximately 15% each year, but this number is so grossly exaggerated that it is hardly worth noting.

When plotted on a graph, the depreciation of a holiday lodge resembles a concave curve, or, to put it another way, an aircraft gently pulling out of a nosedive and relaxing into a calm landing.

This is because modern holiday lodges degrade considerably more rapidly than their older equivalents. The more time you wait before selling your holiday lodge, the less it will depreciate.

When purchasing a holiday lodge, the most important consideration should be finding one that meets your requirements in a place that you like. Another alternative is to purchase a used holiday lodge. This allows you to avoid the expensive initial few years of depreciation and purchase a unit whose value will depreciate much more slowly than a new one.

The disadvantage of this strategy is that the holiday lodge’s lifetime will be shortened, forcing you to purchase another unit sooner. It’s a delicate balancing act.

Is there anything I can do to slow down the rate of depreciation?

The simple answer is no, not at all. Whatever you do, holiday lodge depreciation will continue. No one wants to purchase a rusted lodge, so keeping it in excellent shape and properly maintained is the best strategy.

However, there is another factor to consider: your lodge’s operating costs.

The yearly operating expenses of your holiday lodge include site fees, energy bills, insurance, and financing payments. While they are an unpleasant but essential expenditure, they may be minimised by wisely utilising your holiday lodge.

Sublet income and the actual worth of free vacation accommodations for you and your family may help offset these yearly expenses. You may even find yourself surpassing this annual cost if you rent your lodge for 52 weeks of the year, but this contradicts the purpose of owning a holiday lodge.