The Staycation. The trend is becoming extremely popular; and with it, so are Beach Huts!
The price of beach huts are at an all-time high. A Mudeford Sandbank beach hut recently went on sale for a whopping £575,000!
So, what’s the attraction with beach huts?
Well, they can be great way to spend time with family and friends right on the beach front. Not only that, but they also can provide a 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.
Fiona Knight answers your questions on buying and selling a beach hut.
How much does a beach hut cost?
It can vary widely! We have recently acted on sales at £45,000 and £20,000 but its not uncommon for beach huts on the exclusive Mudeford Sandbank in Dorset to go for £350,000 and above!
Do beach huts hold their value?
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.
What associated costs are there when buying a beach hut?
Possibly Stamp Duty Land Tax, Land Registry fees and notice fees with the landowner.
If the purchase price is over £150,000 then there will be stamp duty land tax to pay.
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 associated 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 has to 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 license document will need to be entered into with the landowner by the seller and the buyer before the sale can complete.
The price for a new beach hut could be subject to VAT. The owner of the beach hut will be liable for business rates unless the buyer qualifies for an exemption.
The owner will require specialist insurance including public liability. Some leases require public liability insurance cover of £2 million cover for any single claim.
Are beach huts freehold or leasehold?
Generally, beach huts are leasehold. However, in some areas you may only have an annual license to site the beach hut which you own.
Is ground rent payable for beach huts?
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 beach pod in a building on the seafront, then there is usually a service charge payable for the building and no ground rent.
What are the potential issues you could run into 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 including the transfer and license to assign and arrange for any stamping, registration and notice are dealt with
What are the potential issues you could run into 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 bills will still be sent to you
A specialist solicitor’s advice
However, in legal terms, they are commercial property. So, the commercial landlord and tenant laws and business rates rules apply.
Whatever the price and whether a seller or a buyer you need to protect your money by following the correct process and using the correct documents."
Specialist Beach Hut sale Solicitors
Fiona has dealt with many beach hut transactions over the years and can give you specialist advice in your purchase or sale.
All new clients can have a free initial meeting with one of our bright experts. These can take place over a coffee at one of our offices, by phone or video conference. Call us on 01202 499 255 or fill in the get in touch form on this page to arrange yours.
* 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. *