BRITISH HOLIDAY HOMES SET FOR COMEBACK

But the fastest growing sector could be purpose-built holiday parks - their communal facilities boost rental demand, and owners get their property maintained year-round within a secure site for a four figure annual fee.

Prices on many of these developments start at £100,000-plus, which many in the over-50 generation, who have paid off the mortgage, will happily pay to avoid the holiday crowds and airport hassles.

Investors and second home owners spend around £375m a year on holiday lodges, usually prefabricated and often timber-clad, with hi-tech gadgetry like plasma TV screens, fully-fitted kitchens, and decked terraces.

The specification is higher than that at The Bay at Filey, a £120m project on a 150-acre site - formerly a Butlin's holiday camp - which claims to be "changing the face of Yorkshire's coastline".

All of the 700 holiday homes planned will have full 10-year NHBC warranties against defects, like new homes in the mainstream housing market.

Communal facilities promised include a convenience store, a gastropub, leisure complex with indoor pool and fitness suites, tennis courts, bowling greens and spectator areas.

Wayne Low, one of the directors of The Bay, maintains: "We are not touched by the credit crunch. In fact, lettings have picked up since interest rates began to bite, making a more secure model for investors.

"Some buyers, who are pure investors, realise our two bedroom cottages can earn £750 per week.

"In the mainstream rentals market, the same property would get £750 per month which means holiday properties command higher rentals, although they aren't occupied 52 weeks a year."

Sales at The Bay start at £125,000, with additional options including furnishing packs from £5,000. Around 150 sales have been achieved so far, with Phase II currently selling off-plan.

Grandest houses and penthouses due next year, will enjoy the best sea views and could fetch £750,000. Annual charges around £3,000 per property cover site maintenance, round the clock security and even golf buggies to cart guests to and from the beach.

"Some buyers have no intention of letting, others want tenants when their property is vacant," Low says.

"Our scheme uses Hoseasons as a letting agent, and owners collect 70% of the rental paid."

Low thinks demand is strong because "our homes will appreciate in value while many caravans and lodges are depreciating assets from the start. Lodges on many sites are really two caravans bolted together".

But he thinks the biggest argument for holiday villages like The Bay is that they don't affect local housing markets by raising prices and stopping locals from buying.

"About 10-20% of homes in Filey and Whitby are only used by owners at weekends," he says.

"We stay open 12 months a year, although owners can't make it a permanent home."

Typically buyers at The Bay put down 25% deposits and get a mortgage for the rest. But those who prefer to borrow smaller sums for weekend boltholes still have plenty of choice.

Haven Holidays, part of Bourne Leisure Group, offers static holiday homes (caravans) on 34 parks around the UK from £9,995 for secondhand units at Golden Sands, near Mablethorpe and Blue Dolphin on the North Yorkshire coast.

Buyers need a deposit of £3,000, and Haven fixes finance on the rest, with 84 monthly payments of £121. 17 representing a flat rate of 6.5% fixed, or 12.5% APR.

Haven's premium lodges in exclusive gated developments fetch around £150,000; they enjoy superb views, parking for two cars, floor to ceiling windows, supersize flat screen TV's, ensuite facilities and decking with room for a hot tub. Prices include first year site fees and insurance.

With swimming pools, other sports, playgrounds, and a programme of entertainment and activities, Haven sites are open nine months a year with peak season rentals hitting £500 per week. Owners resell on the open market, or ask Haven to find the buyer.

"We always stress the lifestyle attraction of our park homes: a holiday base in a nice, peaceful location with lots of things to do," Haven spokesman Keith James says.

"It shouldn't be viewed as an investment like bricks and mortar, where owners hope to make big profits from eventual resale."

In the North-East, Parmontley Hall Country Lodges near Hexham, Northumberland, are deep in the stunning setting of the North Pennines Area of Outstanding Natural Beauty.

Onsite activities on the doorstep include fishing, walking and cycling, nearby Ullswater and Hexham, and tourist attractions like Hadrian's Wall and Kielder National Park.

Lodges start around £120,000. Potential buyers can spend three nights in a lodge for £295, to see if the lifestyle appeals.

"Lodge-style living is all about fresh air, relaxation and a sense of wellbeing, which is what Parmontley Hall can provide," estate owner John Blackett-Ord says.

In South-West England, work has started on a scheme between Sidmouth and Seaton in East Devon by Topsham, Devon-based developer M2 Leisure which has pledged "to reinvent the British holiday."

Stoneleigh Village and adjacent Weston Combe will include new and improved holiday cottages - also covered by a full 10-year NHBC warranty - on a 13-acre site.

The scheme will include an indoor heated pool, spa treatment rooms, bar, cafe and bistro restaurant, as well as nature walks and a play adventure experience.

Mark Lynn of developer Now Property, which is selling cottages to second home buyers and investors, says he has seen a marked shift of interest among second home buyers in recent months.

"Concerns about global pollution, terrorism, airport hassles and soaring air fares have combined to make many of them think twice about buying and holidaying overseas."

Two bedroom cottages in Stoneleigh Village start at £160,000, with three bedroom houses in Weston Combe hitting £300,000. The reservation fee of £1,500 paid to secure a property is followed by a 10% deposit, with mortgages up to 75% loan-to-value, subject to status.

The developer advises owners to be prepared for annual service charges in the region of £2,000.

Assuming the credit crunch has worldwide implications, mobile homes in Europe will also benefit from rising demand for cheap holidays.

Siblu, which sells mobile homes on 14 holiday parks throughout France, has a lead-in price of £10,711 for secondhand units, and £17,000 for a brand new two bedroomed unit in the Aquitaine region.

Letting schemes offered on all mobile homes less than seven years old either guarantee rental for accommodation in July/August, or provide payments for other weeks let while parks open between February and November.

Minimum deposit required for a Siblu unit is 15%, and finance from a French company called Financo currently costs 4.91%, payable over seven years.

INFORMATION: Stoneleigh Village/Weston Combe (01767 679 042 and www.now-property.com); Haven Holiday Homes on 0871 230 1299 and www.havenholidayhomes.co.uk); The Bay, Filey (0800 612 1621 and www.thebayfiley.com); Parmontley Hall Country Lodges (01434 345 273 and www.parmontleylodges.co.uk).

Some 25,000 holiday homes are currently advertised on www.holidaylettings.co.uk, with 1.5m holidaymakers visiting the site each month.

:: BRITONS CONTINUE TO BUY ABROAD, SAYS SURVEY

Spain and France remain the most popular choices for Britons buying holiday homes aboard, according to a new analysis, accounting for 34% and 23% respectively of the total 425,000 UK-owned second homes abroad.

The survey by estate agent Savills, in association with Holiday-Rentals.co.uk, predicts that during 2008 UK owners will spend a further £5.2bn on holiday homes abroad, to make a total of £58bn.

Property prices in Spain "turned negative" during 2007 - but Savills Research says buyers still like it as "the ideal holiday location".

Elsewhere, a lucky minority of buyers enjoyed a fast return on their investment.

"Higher levels of capital appreciation were recorded in Eastern European countries with cities including Sofia and Warsaw seeing over 20% price growth," the survey reports.

One factor still driving demand is lower prices abroad. Savills Research indicates the average property price for all UK overseas second homes is £135,000, much lower than the average price of a second home in the UK.

"This is one of the key reasons why UK investment abroad is so strong amongst older home owners," the report says.

"Retirement was the major motivation for acquiring overseas property for 18% of respondents included in our survey.

"These owners tend not to require mortgage finance, and their motivation for renting out their property is to contribute towards the cost of maintenance and to avoid it standing empty."

"Fly to let" investors have capitalised on the growth in city break tourism by investing in cities including New York, Barcelona and Paris, with Eastern European destinations fast improving in popularity including Prague, Krakow and Budapest.

During 2007 nearly 60% of homes purchased abroad by Britons cost less than £200,000; some 28% cost between £100,000 and £150,000, the survey reveals.

Results also show that despite growing awareness of climate change overseas, home buyers are actually looking further afield to buy in locations such as Dubai, the Far East and the Caribbean.

"Investing in overseas property, both for leisure and investment purposes, remains a key aspiration for many Britons," says Greg Grant, managing director of www.holiday-rentals.co.uk.

"Taking regular holidays is also a top consumer spending priority, despite environmental concerns and the credit crunch.

"As a result, we expect to see continued growth in the holiday home rentals market, both in terms of supply and demand, particularly as more owners realise there is strong demand for holiday lets and that it is relatively simple to self-manage rentals."

According to Savills, most UK buyers estimate they will have around £225,000 to spend on their next overseas purchase, and buyers remain confident over the longer term.

"In these tighter times, savvy owners will realise that a month's rental can, if timed well, pay for much of a year's running costs on a property."

The survey shows investors typically enjoyed 18 weeks' rental income from properties during 2007, compared to 15 weeks by leisure buyers. But investors paid an average £182,000, against £220,000 paid by leisure buyers, so investors achieved higher yields.

Average rents earned by investors was £549 per week - against £622 for leisure buyers. Presumably investors pitched the price a bit lower, in an attempt to boost rental demand.

Since 2000, there has been a marked trend for buyers abroad to use mortgages arranged through lenders in countries where properties are located. A significant proportion of buyers also use a mortgage raised against main family homes in the UK.

INFORMATION: The report on second home ownership abroad was compiled by Savills Research, on www.savills.com/research, in association with www.holiday-rentals.co.uk.