Holiday let product choice trebles since 2020

Borrowers looking to take out a holiday let loan will find a notable rise in product choice since 2020, with more than 200 deals available in the market, according to new data from Moneyfacts.

Related topics:  Mortgages
Rozi Jones
26th January 2022
holiday home summer btl buy-to-let
"While the rise in choice is positive, the market is still relatively niche but could grow further with demand."

Its analysis showd that mortgage options for borrowers looking at holiday lets have increased by 25% since September 2021, and trebled since August 2020.

There are now 231 options available across 27 different brands, two more than in September 2021 and 13 more than in August 2020, the majority of which are currently building societies.

Separate research from Hodge revealed a rise in holiday-let mortgage applications of 173% in 2021 compared to 2020.

Rachel Springall, finance expert at Moneyfacts, said: “As the desire for a UK vacation rose due to the pandemic, the prospect of earning some extra income through a holiday let has spurred borrowers into action and lenders are catering for this demand. There are now more than 200 options available for borrowers comparing buy-to-let deals designed for holiday let, and 27 lenders are on board, many of which are building societies. While the rise in choice is positive, the market is still relatively niche but could grow further with demand.

“Whether such buoyant activity in the holiday let market will remain is unknown but, encouragingly, research from Hodge revealed a 173% rise in mortgage applications for holiday let in 2021 compared to the previous year. If the demand for a UK holiday in 2022 lessens, consumers may still get a reasonable return on any investment, but it’s vital for them to ensure they are offering a let during a bustling season so they do not miss out on a demand spike. There may also be the need to fund upfront costs to get a property at a high standard to let, to entice a larger clientele and to stand above the competition. Should this be the case, borrowers will need to think carefully about what can make them a unique booking, and this will often depend on their location and the time of year.

“Seeking advice from an independent financial adviser before entering a holiday let arrangement and indeed a listing service is wise, particularly as new small business rates relief rules are to come into play next year. The Government announced new measures to ensure homeowners letting out a property are not abusing a tax loophole. To qualify for business rates, holiday lets will need to be rented for a minimum of 70 days a year and available to be rented out for 140 days a year under new rules which are to come into force from April 2023, and evidence will need to be shown. The move is geared to protect genuine holiday lets and crack down on others, so it will be interesting to see how this will affect those considering an investment, but are perhaps not quite confident they can meet the new requirements.”

More like this
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.