Holiday let mortgage options have more than doubled since the Autumn as increasing numbers of lenders are returning with offerings to this area of the buy-to-let market.
Back in October 2022 there were 173 mortgages for would-be holiday let landlords to choose from. But new data from Moneyfacts.co.uk revealed this has increased to more than 400 today.
It comes just a few months before rules are introduced by the government, which mean properties must be rented for a minimum of 70 days a year to qualify as a holiday let.
Rachel Springall, finance expert at Moneyfacts.co.uk explained more about the rules: “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, and homeowners will need to show evidence of their lettings and meet certain criteria to qualify for business rates relief.
“These new rules are due to come into force this April and are designed to protect legitimate investors.”
What are the pros and cons of investing in a holiday let?
There are some other challenges to the holiday let market – namely rising interest rates which may dent profit margins.
Moneyfacts data shows the average fixed rate holiday let mortgage was 3.92% in January 2022 but it is now 6.17%.
Meanwhile the cost of renovating a property to holiday-let standards may also be more difficult financially as the cost-of-living crisis bites.
On the other side of the coin, whilst these factors may impact the popularity of holiday lets as an investment option, Springall thought the cost-of-living crisis may drive up demand for UK holidays, making them a more attractive prospect.
“As the holiday aspirations of consumers change, demand for UK holidays could fall, but at the same time, the country is facing a cost of living crisis which may keep them interested in a more cost-effective UK break,” she said.
Springall added: “Mortgage interest rates have risen over the past year, so it is imperative prospective landlords seek advice to compare their options and consider a fixed rate deal for peace of mind.
“Investors picking a property with their head over the heart is extremely wise, and in-depth research must be done on locations and listing services to ease any concerns over letting exposure and seasonal dips.”
| Buy-to-let mortgage market analysis (Source: Moneyfacts.co.uk) | |||||
| BTL options available (fixed and variable) |
Jan-22 | Sep-22 | Oct-22 | Dec-22 | 20-Jan-23 |
| Available to holiday let | 231 | 320 | 173 | 289 | 411 |
| Lenders offering holiday let deals | 27 | 31 | 26 | 30 | 34 |
| Average fixed rate available to holiday let | 3.92% | 4.94% | 7.47% | 6.51% | 6.17% |
| Data shown is collected at the first available day of the month, unless stated otherwise. Source: Moneyfacts.co.uk | |||||
