The costs of setting up a glamping site, and equipping it with, for instance, glamping pods can be considerable. Such costs need to be met before the site can even start trading, let alone cover its costs, so most prospective owners will need some source of finance to deal with them. In this, and two other blogs about Commercial Loan and Finance Leasing we will look at possible finance arrangements.
Hire purchase is very commonly used to purchase cars, furniture, household appliances etc. It is a hire agreement for a fixed term, containing the agreement that at the end the purchaser will take ownership of the asset (the pod). A finance company provides sufficient money to cover the purchase cost of the item, and the borrower agrees to pay back a fixed amount, usually monthly, over a fixed, pre-determined time. The VAT due on the purchase is included in an initial deposit.
Following repayments include the capital and an amount for (usually quite high) interest. The legal ownership of the item does not transfer to the borrower until the last payment has been made.
In simple terms, very expensive. However, if you want a flexible, unit by unit, finance deal it may still be a good deal. If you can negotiate it the tax-saving may set off against the higher cost.
If you have difficult credit, if you want to keep the cost of purchasing pods separated from other costs, if you want to add more units to an established site, then hire purchase may be a helpful option. Get advice on how you can do that tax efficiently.
If you are starting a new site and need to finance land purchase, site modifications, set-up costs, if you have strong credit and can talk to a friendly bank or loan company, then it may not be so good an option.