UK-based holidays have soared in demand during the pandemic, with buy-to-let investors flocking to the holiday let sector to take advantage.

Holiday let mortgage availability has trebled since 2020, making it easier for would-be investors to tap into this demand. According to recent figures5 there are more than 230 buy-to-let mortgages eligible for holiday lets on the market, versus just 74 back in August 2020.

Competition between lenders has become keen, with average interest rates reducing from 4.14% in September 2021 to 3.92% in January 2022.

Factors to consider

– As you can’t buy a holiday home with a standard residential mortgage, you’ll need to opt for a specialised buy-to-let or holiday let mortgage

– The government is currently working to close a tax loophole that has seen people claiming tax relief on empty properties. Holiday let owners will soon be required to prove that their property is being let for at least 70 days each year to claim small business tax relief

– It’s important to think about the additional costs involved above and beyond buying the property itself. For example, you may have to spend a significant amount up-front to get the property ready for holiday let clientele. You’ll also have to consider how much the property is likely to generate in rental income and whether this is likely to be sustainable

Get advice

We can help you weigh up your options and recommend the most suitable mortgage fi nance for your needs.

5 Moneyfacts, 2022