How to invest wisely in the staycation boom

Nick Dyson, Head of Commercial Property at Blacks Solicitors, discusses the rise in staycations as a result of the pandemic and what to look out for if you’re considering purchasing a holiday park.

With travel abroad still under strict restrictions due to the ongoing Covid crisis and the impact of Brexit, it seems that staycations are set to be a significant trend for the rest of the year.

According to holidaycottages.co.uk, four out of five Brits (84%) are planning a staycation in 2021.

We’ve already seen the positive impact of the staycation boom on numerous businesses, including Hull-based holiday home manufacturer Willerby which recently reported that it was hiring over 100 staff to meet the growing demand for holiday homes. In fact Park Leisure recently revealed that over three quarters of Brits (77%) now aspire to own a holiday home in the UK.

Now, more than ever, people are looking to invest in this booming sector and are considering buying or selling park businesses.

To buy or not to buy?

As lockdown restrictions ease and consumer confidence increases, and people look to holiday in the UK while trips abroad are still difficult, the sector is expected to grow in profitability and it therefore might be worth considering acquiring a parks business.

If you’re looking to expand your portfolio, invest in a new business, or simply want to try something new, a parks business is definitely worth investigating. However, it’s important that you’re fully aware of every step involved in purchasing a park, and whether you’re in the right place personally, financially, and career wise to take the next step.

Tax

Once you’ve decided that purchasing a park is the right move for you and a deal has progressed, it’s important that you check with your accountant on how best to structure the deal.

There can be significant differences on capital allowances, stamp duty, VAT, and reliefs available depending on how you allocate ownership and trading arrangements. While this may seem confusing at first, a good accountant should make it clear exactly what you need to do to make the deal go through successfully.

Property

Once you’ve identified a park , consider the property side of the purchase. Have you checked the boundaries and plans? Have you considered any issues that may arise?

Sites are often large and sometimes what is on the ground may not match what is on the land registry plans. Informal rights may also have been given to neighbours and it’s key to ensure your position is clear.

Planning

Your planning and licensing position must be up-to-date and accurate. The site licence should match the number and type of units granted permission, otherwise you may run into difficulties.

Remember that there may also be additional value in potential development – identify this early so that you can progress sooner rather than later.

Employees

Ensure you understand who is employed at the park and which staff are critical to the business.

Some park wardens may be on modest wages but have great relationships with customers and play an important role in ensuring customers are happy. Incentivise staff with various benefits, such as a good holiday allowance and reward schemes based on positive customer feedback , to retain and attract new talent. This in turn will keep your park profitable.

Contracts

Check your systems and booking arrangements for operating the park and ensure you identify any areas for improvement.

It’s also crucial to conduct an audit of the  contracts already in place which are key to the operation of the business and consider how those arrangements can be continued after purchase and, if necessary, modified.

Check the Licence Agreements in place with caravan owners in the park. For example, is each pitch occupied on identical terms and are all of the terms written down? This will provide you with certainty on the obligations of the caravan owners on a wide range of matters (including payment of the pitch fee and sale of the caravan).

For more information on purchasing or selling a holiday home park, get in touch with Blacks Solicitors at www.lawblacks.com.