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Is buying a beach hut a good investment?

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Is buying a beach hut a good investment?

With Summer right around the corner, beach hut buying and selling is sure to rocket especially on the South Coast.

With offices in Christchurch and Ringwood, we’re only ever a stone’s throw away from a beach and, by extension, a beach hut. In fact, earlier in 2024, a beach hut went on sale for a whopping £480,000 right on our doorstep at Mudeford Beach.

But are beach huts a good investment? And what’s involved in buying or selling one? Commercial Property Expert Richard Ramshaw outlines everything you need to know in this article.

Why are beach huts so popular?

Well, they can be a great way to spend time with family and friends right on the beach front. Not only that, but they can also provide rental income too.

With beach huts being so popular, and lots of people looking to buy or sell, we thought it would be a good idea to answer some common questions.

Richard Ramshaw answers your questions on buying and selling a beach hut.

How much is a beach hut in the UK?

It can vary widely! We have recently acted on sales at £45,000 and £20,000 but it’s not uncommon for beach huts on the exclusive Mudeford Sandbank in Dorset to go for £350,000 and above!

Is buying a beach hut a good investment?

Generally, beach huts hold their value in the early years of the lease duration but not towards the end. There is no automatic right to extend the lease period or to buy a further lease.

This will have to be negotiated with the landowner (usually the local Council) and paid for at the market rate at the time assuming the landowner does not want the site back.

Do you pay rates on beach huts?

Possibly Stamp Duty Land Tax, Land Registry fees and notice fees with the landowner.

Read more about stamp duty, how it works and how to get relief here.

If the lease period is over 7 years then it must be registered at the Land Registry. Any subsequent sale of the lease will also need to be registered at the Land Registry.

Notice of the transfer will also need to be served on the landowner and their fees paid.

What costs are there when selling a beach hut?

When selling, most leases provide that you have to offer the lease back to the landowner first and if they do not wish to buy back the lease, then the seller must pay the landowner a Transfer Fee.

This is often 15% of the sale price or market value of the beach hut whichever is higher. If there is less than 3 years since the beach hut was first sold, then vat could be payable on the Transfer Fee.

The seller will also have to pay the landowner’s legal fees, surveyor’s fees and sometimes seafront services fees for issuing the formal consent to the sale. Plus, any unpaid service charges will have to be paid up to date.

Do you need a solicitor to buy a beach hut?

It is advisable although not a legal requirement. Any lease is a complex document. A beach hut is a commercial lease and so the Landlord and Tenant Act 1954 applies.

A formal licence will need to be entered into with the landowner by the seller and the buyer before the sale can complete. This acts as formal consent to the sale.

The price for a new beach hut could be subject to VAT.

The owner will require specialist insurance including public liability. Some leases require public liability insurance cover of £2 million to cover for any single claim.

Read our dedicated article on this question here.

Are beach huts freehold or leasehold?

Generally, beach huts are leasehold and registered at the Land Registry. However, beach huts can also be freehold and in some areas you may only hold the beach hut under a licence which you would need to renew every year. 

Do you have to pay ground rent on a beach hut?

Under some leases, yes. If this is the case, it is usually reviewed on an upward only basis on the first April each year.

If you have a beach pod in a building on the seafront, then there is usually a service charge payable for the building and no ground rent.

What problems can arise when buying a beach hut?

Below are some steps that you, the buyer, should take to avoid any potential issues:

  • Make sure the seller has the landowner’s consent
  • Make sure that the seller has paid all the outgoings on the beach hut including the landowner’s transfer fee and costs
  • Obtain from the seller all the correct documents. We would recommend that you obtain the lease or licence from the seller upfront so you can see what your obligations will be during your ownership.
  • We would suggest that solicitors are instructed for the buyer and the seller to ensure the legalities are dealt with correctly.

What problems can arise when selling a beach hut?

Below are some steps that you, the seller, should take to avoid any potential issues:

  • Make sure you have all the necessary consents and have paid any transfer fee and costs with the landowner
  • Make sure the purchase monies are in your bank before handing over any documents
  • Ask the buyer for proof that the beach hut is registered in the buyer’s name. Otherwise future bills will be sent to you

Our beach hut advice

Richard RamshawCommercial Property Solicitor, says: “Although buying a beach hut seems like a simple process, it can be complex depending on what requirements need to be met.

I would always advise clients to seek specialist advice when buying any property to make sure they understand any restrictions placed on the use of the property and their obligations.

Having acted for clients all over the South of England, there doesn’t seem to be a set way of owning a beach hut and so I would recommend that buyers carry out as much research and gather as much information as possible before committing to the purchase."

Have a look at our dedicated Beach Huts page here.

Specialist Beach Hut sale Solicitors

Our team have dealt with many beach hut transactions over the years and can give you specialist advice in your purchase or sale. We would be happy to assist you in this area, or with any other query you might have!

We offer a free initial appointment for all new clients, where we can iron out the details, so please don’t hesitate to get in touch on 01202 499255 or by filling out the form at the top of this page.

* This article assumes a lease of over 7 years registered at the Land Registry. Bournemouth Council sell beach huts and beach pods on leases for 15 years. It does not relate to renting a beach hut from a Council on a yearly basis. *

The content of this article, blog or video is not intended as specific legal advice. For tailored assistance, please contact a member of our team.