Oasis Hong Kong Airlines are the first to offer low-budget long-haul flights in what it seems to be the beginning of a trend (if all goes well for Oasis). They are offering a cheap economy one way from London to Hong Kong starting from 75GBP (112GBP with tax). Business class starts from 470GBP one way.

They claim the cheap flights do not come with a decrease in comfort, promising comfortable seats, multiple meals, audio channels and personal TV screens. For instance, the seat pitch in economy will be 32'', which is the same or even better as other companies offer between Hong Kong and London.

 

The inaugural flight between Hong Kong and Gatwick suffered from some problems with the Russian authorities who claimed Oasis didn't have clearance to fly over Russian space. The service eventually took off and the airline issued a statement saying the journey times will be affected as they had to change flying route. The move added 1 hour and 10 minutes to the published schedules.

 

Oasis Hong Kong Airlines is a budget airline based in Hong Kong and using Hong Kong International Airport as its main hub. The first long haul route will be a direct London - Hong Kong route, with destinations in the EU (Milan, Berlin, Cologne/Bonn) and in the US (Oakland, Chicago) to follow shortly.

Oasis was established in February 2005 by a pastor, Rev. Raymond C. Lee and his wife, Priscilla H. Lee. The CEO, Steve Miller, was the founder and CEO of another Hong Kong based airline, Dragonair.

Oasis is flying 2 ex-Singapore airlines Boeing 747-412 aircrafts. The configuration will be 81 Business class seats and 278 Economy class seats.

 

The move is very relevant for the holiday home owners as it might mark the beginning of a trend for cheap air flights, which in turn might see holiday home owners moving further away from their home ground in their hunt for bargain holiday home deals. With the European real estate market becoming more and more competitive, it's a move many holiday home owners will contemplate. It's a move that, if successful, can really open the Asian real estate market to the European holiday home owner.

While it is a good news for holiday home owners who have more options, it is however a bad news for the environment. As flights get cheaper, more people are encouraged to fly and more carbon emissions we release into the atmosphere.

If you're thinking of buying a holiday home abroad, you seriously should pay attention and learn from the story of Bulgaria. Bulgaria has been the newest hype word around the international property market. It has been marketed furiously as the new El Dorado for holiday homes.

 

When it comes to buying properties, abroad or at home, it's all about location location location. However, if you're a property investor, it's also about price, it's about being the first in a market, about spotting the trend changes and picking new trends before everyone else. And Bulgaria seems to have all of these. It's located in Eastern Europe, soon to join the EU. It offers something for everyone's taste, as it has nice beaches at the Black Sea and also mountains quite popular with skiers. It's also very cheap, but the prospects are there, as EU will pour money into Bulgaria into the next decade.

 

So what's wrong with Bulgaria?

 

It's been over-marketed and a lot of investors have rushed in to buy cheap and sell in couple of years for a handsome profit. In the meantime there is always the rental market. Holiday home rental market is a viable means of paying for your property or, at least, for the inherent maintenance costs. The demand for Bulgarian properties has been huge. And, in turn, this has awakened a whole generation of property developers. The result: over-development.

 

The over-supply of holiday apartments, holiday villas and other holiday homes has created a dramatic competition on the holiday home rental market, with the returns for holiday home owners plummeting. The annual rate of capital growth has also dropped from a 36% in 2005 to 13.9% in September 2006, according to Assetz Property Investment Tracker.

On the rental market, the return on investment has plummeted from 116% in 2005, to just 35% in September 2006 according to the same source. The drop in the return is also aggravated by the poor management from local agencies.

 

Should you avoid buying in Bulgaria altogether? The answer is no. But you have to take into account this worrying trend. You can still buy in Bulgaria, but do your own research. If you want to rent your holiday home, research where tourists are going. There are hotspots and there are dead spots. In the end it's all about location location location. Put yourself in the shoes of a regular tourist. Who is your targeted regular tourist anyway? Where would they go? That's where you want to buy your dream holiday home for the best rental return on your investment.

According to the UK National Statistics, during June to August 2006, there were 7.7 million visits to the UK by overseas residents - an increase of 5% compared to the same period on the previous year. Spending increased by 8% compared to the same period on the previous year, to £3.8 billion.

Visits overseas by UK residents showed an increase of 2% when compared to the same period an year earlier. Spending increased 6% to £8.3 billion.

Visits by overseas residents to the UK rose by 6% during the 12 months ending August 2006, from 29.5 million to 31.2 million. The number of visits from North American residents increased by 4% (to 4.4 million), from residents of Western Europe by 5% (to 20 million) and from other parts of the world by 10% (to 6.8 million).

In the same 12 month period, visits abroad by UK residents rose by 3% from 65.8 million to 67.7 million. Visits to North America decreased by 6% (to 4.7 million). However, visits to Western Europe increased by 2% (to 50.7 million) and to other parts of the world by 13% (to 12.4 million).

WE looked at four of the most popular locations. Tax, planning and legal requirements are complex and you should consult a local solicitor who speaks good English. Even if you buy abroad you are still liable to UK taxes as long as you are a British national and remain a UK resident. But Revenue and Customs has arrangements with most countries to make sure you're not taxed twice. Sadly, you'll always pay the higher rate. So if you are a higher-rate taxpayer in the UK (paying 40%) and you rent out your property in Spain, the Spanish Government will charge you only 25% income tax - but you'll have to pay the 15% difference here.

FRANCE:
Average cost of property: £130,000. Income tax on rent: Up to 48%. Capital gains tax: 16% for EU residents, then further reductions after two years. Inheritance tax: Complicated system but can pay up to 40%. Wealth tax: Up to 1.8% of property's value every year. Estate agents' fees: From 4% to 12%. In some areas, the buyer pays half. Stamp duty: 4.89% but exemptions apply. VAT on new properties: Up to19.6%. Council tax: Based on property's value. Exemptions if property is vacant.

SPAIN:
Average cost of property: £130,000. Must obtain an NIE number - a foreigner identification number. Income tax on rent: 25% for non-residents. Tax breaks available. Will still be taxed if you don't rent out home at level set by government. Capital gains tax: 35% when you sell property. Inheritance tax: Not a fixed rate. Depends on number of factors including the wealth of beneficiary, not just benefactor. Wealth tax: From 0.2% to 2.5% of value of property every year.Stamp duty: Transfer tax of 6%/7% but not paid if you've already paid VAT. VAT: 7% for newly-built properties. Rises to 16% for plots of land, commercial premises. Council tax: Payable along with other small taxes. Set by town halls.

ITALY:
Average cost of property: £130,000. A Fiscal number is required - the equivalent of a National Insurance number. Income tax on rent: About 43% for non-Italian residents. Tax breaks available. Will still be taxed if you don't rent out home. Capital gains tax: None, but annual tax on property. Inheritance tax: None. Wealth tax: None. Stamp duty: Registration tax of 7% to 15%. VAT: Up to 20% on new properties. Council tax: 4 to 6% of land registry value. Separate taxes for rubbish disposal and water.

PORTUGAL:
Average cost of home: £90,000. Income tax on rent: 15%. Capital gains tax: 25% for non-residents. Inheritance tax: None. Wealth tax: None. Stamp duty payable: Transfer tax of 2% to 8%. This replaced inheritance and gift tax. VAT: Up to 21% on new properties. Council tax: Twice a year up to 0.8%.

Source: thisismoney.co.uk

Below there is an article from thisismoney.co.uk that shows the extent of the 'holiday homes abroad' phenomenon.

(excerpt from thisismoney.co.uk)

MORE than a quarter of a million Britons own a foreign property. This number has risen by almost 50% in the past six years and continues to grow, thanks in part to the numerous television shows extolling the joys of having a holiday home.

This figure is expected to double in the next five years, according to Halifax Estate Agents. The most popular destinations for second homes abroad are Spain, France, Florida, Portugal and Italy. Others growing in popularity include Croatia, Turkey, Cyprus and Morocco, where people often expect to pick up a bargain.

But before you dive in head first, there are many issues to consider, especially if you plan on renting out the home. Although Europe has a single currency and many common laws, there are still massive differences in the tax and legal requirements when buying and renting your French castle or Spanish villa.

The key is to do your research. A good idea is to agree a loan in principle with the mortgage company for your main home to give you an idea of how much you can spend. Simon Conn, managing director of Conti Financial Services, a specialist in buying property abroad, says: 'Don't always get drawn to places on the basis of cheap flights. There's no guarantee the budget airline will always fly that route, which means rental potential will plummet.'

Because the majority of people take a mortgage secured on their UK home, the lender doesn't need a valuation on the holiday home. But Mr Conn warns: 'This is very dangerous. We constantly hear horror stories of people buying places without getting an independent valuation done and just trusting local developers. In some cases, the property has later been demolished as it breached planning rules.'

Splashing the cash

The easiest option is to raise capital on your existing UK home, providing you have enough equity built up in it. Your lender may want to revalue your home and will make a charge for this as well as charging for the further advance of money.

You will also be restricted to whatever mortgage deals your existing lender offers. However, if you do not have penalties on your existing mortgage, you could look around for a new deal and remortgage. Alternatively, you could opt for a foreign currency mortgage. A euro mortgage will normally be done with a bank or lender close to where you want to buy, though some UK banks and building societies have overseas operations. The overseas lender will do their own checks on the property to make sure the home is registered in the seller's name and that a proper legal title exists.

Euro mortgages tend to be cheaper. The interest rate for a sterling mortgage in Spain is about 6.25% compared with rates from 3.7% for a euro mortgage. The big High Street lenders Barclays, Halifax, Lloyds TSB and NatWest offer foreign currency mortgages. Whether this is right for you will depend on your personal circumstances.

Rob Clifford, at national broker MortgageForce, says: 'While a euro mortgage looks cheaper, it can be fraught with hassle as you are exposed to exchange rate movements which can make monthly costs higher than expected and make it difficult to budget. But a euro mortgage is a better option if you're renting the property out and being paid in euros, as the rental income can be offset against mortgage repayments.'

Picking up a bargain

Eastern Europe is growing in popularity with holiday makers and holiday home owners searching for a bargain. You can, for instance, pick up a two-bedroom property at a Black Sea resort for about £50,000. Properties in the mountains cost about £40,000.

A two-bedroom apartment on Croatia's Istrian Peninsula will cost you about £60,000 while a new-build villa could be £150,000 or more. But be warned that in some countries you can't buy land or property directly, so a limited company has to be set up to do this. Also, while properties are cheaper, there are risks associated.

Although tourism is growing, there is no guarantee this will continue, which affects rental potential. Eastern European countries also have less stable political climates so if a government changes and takes a dim view of foreigners buying its properties, your investment is at risk.

However, Andrew Hamilton, marketing manager at The 4Less Group, an overseas property mortgage specialist, says: 'The Bulgarian market is becoming increasingly more stable as they are set to join the EU in early 2007. Buyers can find a two-bedroom apartment for as little as £10,000 and the appeal of buying is likely to grow in the future.'

He adds: 'British buyers are becoming more adventurous and long-haul destinations such as Florida, South Africa, Canada, New Zealand and Australia form the next tier of our inquiries.'

Despite the sharp increase in house prices in the UK, more and more britons opt for a holiday home and, contrary to populary belief, Spain is not the main destination. A third of all british holiday home owners have a holiday home in their native country. Spain comes second, with a fourth of britons choosing it to invest in the property market there.

In the UK, the britons go for the South West, with 30% of all holiday home owners choosing the South West when they buy. The Midlands is the least popular location.

The trend is upwards, as 7% of the holiday home owners admitting that they're thinking of buying a holiday home in the next 5 years. If that happens, the number of holiday homes will double.

More and more britons buy, not just as an escape and as a holiday home, but also as an investment. By buying a holiday home within reach, they are counting on enjoying their holiday home, while also making a profit from it. More britons opt to rent their holiday homes to holidaymakers, either by using specialised agencies or adopting a more DIY approach and marketing their holiday homes on their own on the internet.

The explosion of holiday homes in rural Britain has led to some communities being in danger of becoming winter ghost towns. At least this is the conclusion of ministers looking at plans on how to tackle this growing problem. The plans being considered aim to reduce the numbers of properties being sold to holidaymakers as second homes and encourage a steady supply for local people.
Home owners in some of Britain's beauty spots will have to apply for planning permission should they want to sell them to holiday home buyers. The change will be mainly applied to places where the second home ownership reaches 40-50%, transforming them into ghost towns in the off-peak season.

Holiday home owners will also face extra taxes to help pay for public services and social housing. Sir Michael Lyons was left in charge of finding the right mechanism for applying this new taxes. One option is the introduction of an absenteeism tax on the length of time a house is unoccupied and the household is not contributing to the local economy.

The Goverment needs to find new ways of identifying second homes or holiday homes. According to official data, there are only 100,000 second homes in England. However, consumer surveys reveal the real number being around 300,000.
One possibility here would be to extract information from the self-certification process for income tax, in addition to perhaps fining people for providing false information.

As said, the full problem is not shown in big cities like London, where second home ownership is not a problem, but in places such as Cornwall and the Lake District where any dead period can be catastrophic for the local economy. Holiday homes owners are not sending their kids to local schools, they are not buying in local shops, not using local services which raises the probability of these services disappearing slowly. This is a serious problem for local people.

Measures to restrict sales of new houses to local people are already to be introduced in parts of the Highlands. Similar measures are already in place in the Brecon Beacons, Dartmoor, Snowdonia, Exmoor, the North Yorkshire Moors, the Yorkshire Dales and the Peak District. Times Online reveals that the cost of a rural home is now £200,000, 19 per cent more than an urban property. It also compiles a list of most popular second home places in England. Below you can see the percentage of second homes in these areas.

City of London: 27.2%
Isles of Scilly: 21.5%
South Hams, Devon: 10.9%
North Norfolk: 10.0%
North Cornwall: 9.9%
Berwick-upon-Tweed, Northumberland: 9.5%
Westminster: 9.1%
Kensington & Chelsea: 8.7%
Penwith, Cornwall: 8.6%
South Lakeland, Cumbria: 7.6%

Bulgaria, the African island of Cape Verde and Canada are the new top holiday home destinations, figures reveal. One in ten inquiries about foreign holiday homes in the UK is about Bulgaria, which has become the latest holiday home hotspot for Britons. Spain leads, nevertheless, in the quest for the biggest land grab abroad after the Second World War.

"The number of properties bought by Britons in the former Eastern bloc country has risen by 38% since January", Glasgow Evening Times reported.

However, Spain still remains Britain's sweetheart destination, with 27% of all Britons' second homes and holiday homes abroad located in Spain. The Spanish Ministry of Tourism expects 1 million foreigners to set up a home on the Spanish coast in the next six years.

According to Banco Halifax Hispania, the Spanish arm of Halifax, the UK's largest mortgage lender, the main drive to buying in Spain were the low rate Euro mortgages and the boom in low cost budget airlines flying to Spain.

The passenger numbers from UK airports tripled from 1987 to 2005, with a 9% growth in 2004 alone. The low-cost flights to and from Spain are up 25% from last year, while low cost operators in Spain have increased 160%. This growth has not only opened new possibilities for the DIY traveller, but has also led to the development of new, regional airports. 

With all the low cost flights leaving to Spain from many national and regional UK airports, the Britons have a wide array of options for shorter, more frequent, affordable trips to Spain. It seems to be an overpowering drive for many Britons who buy holiday homes in Spain. A research from Euromonitor's "Travel and Tourism in Spain" report, shows that short trips of one to three days are the fastest growing type of holidays in Spain, accounting for 37% of all trips to Spain in 2004. The trend is only accentuating as more and more people discover a very accessible and affordable Europe on their doorsteps. 

Flying to Spain is nowadays often quicker and cheaper than rail travel within the UK, which fuels the drive of more people to use short trips and even commit themselves to buying a holiday home abroad.

Turkey has seen a holiday home boom after opening up its property market to foreign investors. Previously there was a suspension last year on foreigners being allowed to buy properties in Turkey, but it's all changed now. Buying a holiday home, be it a villa with a swimming pool, cottage, appartment is much easier now, although being subjected to an approval from the Turkish Army. The approval normally adds 3-4 weeks to the buying process.

Turyap, one of the largest real estate companies in Turkey, have estimated that property prices in Instanbul alone will rise 80-120 % this year, after an 85% rise in 2005. It's all the result of foreign investments pouring in, the start of the talks with European Union and the launch of mortgages.

After a new law, allowing foreigners to buy land was passed at the end of 2005, holiday home investors from all over Europe have rushed to snap a holiday home bargains on the Aegean coast. Many agents claim that a lot of the money people were spending on holiday homes in Spain are now redirected to the more promising Turkey. The main draw for this landgrab, be it from private holiday home wannabe owners or from commercial entities, is no doubt the higher return rates they get from investing in the property market in Turkey.

With all the interest in Turkey and in the turkish holiday home market, there is no wonder that EasyJet is preparing to open up a new route from London to Istanbul. The move by such a big budget airline is usually a good indicator of the touristic interest in the area and also in the property market. It's no secret that having an airport near-by, especially one served by a budget airline like EasyJet, lifts dramatically the property prices in the area, as the majority of holiday home owners dream of weekend escapes. It is also an advantage when renting out the holiday home to DIY travellers.

There are exciting news on the market of low budget airlines. The main news comes from BA which has recently cut prices on some of its flights to european destinations as they are aiming to grab more DIY travellers. Some of BA prices compare now with the likes of EasyJet, RyanAir. However, British Airways tries to preserve its image and play above the no-frills league, one example being that they still offer food and drinks for free on these destinations, while the other budget airlines charge for these extras.

As for destinations, low budget airlines are always on the expansion. Here's a brief list of what's new and hot:

EasyJet

- On April 11th, Easyjet added 3 new routes from Liverpool to Faro in Porgugal, Krakow in Poland and Marseille in France

- On March 7th, Easyjet announced 10 more routes.
      London Gatwick to Split (Croatia) to open 2nd of May, 4 times a week (Tue, Wed, Thu, Sat), price starts: £25.99 one way
      London Luton to Bordeaux (France) to open 29th of June, daily, price starts: £25.99 one way
      London Luton to Rimini (Italy) to open 29th of June, 4 times a week (Tue, Thu, Sat, Sun), price starts: £25.99 one way
      Edinburgh to Alicante (Spain) to open 20th of May, on Saturdays, price starts: £30.99 one way
      Bristol to Toulouse (France) to open 21st of July, Daily, price starts: £20.99 one way
      Bristol to Krakow (Poland) to open 21st of July, 4 times a week (Mon, Wed, Fri, Sun), price starts: £25.99 one way
      Bristol to la Rochelle (France) to open 21st of July, 4 times a week (Mon, Wed, Fri, Sun), price starts: £20.99 one way
      Bristol to Marseille (France) to open 22nd of July, 3 times a week (Tue, Thu, Sat), price starts: £20.99 one way
      Bristol to Rijeka (Croatia) to open 22nd of July, 3 times a week (Tue, Thu, Sat), price starts: £25.99 one way
      Paris Orly to Ajaccio (Corsica) to open 14th of July, Daily, price starts: €34.99

- On February 28th, Easyjet announced a new route from London Luton to Lisbon (Portugal)

Ryanair

- On April 12th, Ryanair announced 9 new routes from Frankfurt Hahn to Fez, Granada, Kaunus, Krakow, Marrakesh, Murcia, Trieste, Verona, Wroclaw, prices starting from €2.99 (one way, excluding taxes and charges)

- On April 4th, Ryanair launched 11 new routes from Liverpool to Aberdeen, Alghero, Ancona, Inverness, Kaunas, Krakow, Poznan, Santander, Santiago, Tampere, Wroclaw, prices starting from €2.49 (one way, excluding taxes and charges)

Other low budget airlines: Air Berlin, BMI Baby, FlyBe, jet2, Wizzair.

With all these new destinations, expect to see the holiday home market to boom around these new locations.

From Metro today:

The number of people taking package holidays slumped to its lowest level for 20 years last year, figures revealed yesterday. Just 13 per cent of the 229million people using British airports were taking a charter flight, the Civil Aviation Authority said. The slump was put down to the increasing popularity of DIY holidays, where tourists book flights and accommodation separately.

"A place in the sun live" show was a busy beehive mainly populated by property developers, trying to sell that magic holiday home in the sun that every brit dreams about. Among the popular destinations, the usual suspects France, Spain, Italy, but also some new contenders that are already proving very popular with holiday home buyers. Bulgaria was one of the star of the show, Turkey, Cape Verde, Malta and Cyprus following closely. It's interesting to see how holiday home buyers keep searching ever more distant shores as the traditional destinations become overcrowded and overpriced.

One problem with the holiday homes on sale is generally the fact that they look like huge depersonalised farms, all the houses in the complex looking the same. This lack of personality can be very off putting for buyers that actually want to live in their holiday homes, personality being a very important item on the shopping list. These holiday homes are more appealing to investors, people that buy properties in the sun with the idea of renting them out to holidaymakers, letting them long term or just waiting for their value to go up.

And speaking of letting holiday homes, a very popular seminar during the exhibition was "Hot tips on letting your dream holiday home". The seminar room was absolutely packed with people, while others were left at the door as the room couldn't accommodate everyone. Many people were taking notes and many people were actually owners of properties with a genuine interest in letting their properties in the sun.

Since the seminar was conducted by a web based advertising company, the main tips revolved around advertising online, which tends to be the main source of bookings anyway these days. It is becoming increasingly easy to advertise your holiday home online and just handle the bookings yourself. However, there are some local issues to be considered, like cleaning the house, checking it for damages, general maintenance (e.g. a swimming pool) and so on. In the end, it's all about having the required entrepreneurial skills required to transform your dream holiday home into an income generating business.