Mortgage applications are soaring for UK short-term holiday lets


With demand high for short-term holiday lets from holiday-makers, there has been a rise in investors applying for mortgages for this type of property investment.

The latest figures from Hodge Bank show there has been a spike in mortgage applications for short-term holiday lets. These kinds of accommodation are in high demand as many holiday-makers are planning UK staycations for the spring and summer.

Hodge Bank has revealed the most popular destinations for holiday let buyers. The south-west is the most popular region with 39% of purchases. Wales follows with 19% and the north-west with 12%. Many are forecasting coastal spots and national park areas, such as the Lake District, will be particularly busy this year.

Emma Graham, business development director at Hodge Bank, says: “Many people have not been able to holiday abroad for more than a year now and staycations have therefore become hugely popular.

“We think this has almost certainly led to people re-evaluating their finances, as well as holiday plans and the holiday let market is looking very healthy.”

Mortgage options for holiday lets

Lenders are expanding their offerings to meet this growing demand in the short-term holiday let sector. In the past year, more lenders have opened up mortgage options for this type of property investment.

The data from Hodge Bank shows buyers are willing to pay £403,143 on average for a holiday home. This is nearly two thirds higher than the average house price in the UK. Of those buying a holiday let, 35% re-mortgage their existing home to finance it, and 65% take out a new holiday let mortgage.

Research by Moneyfacts reveals the number of holiday let mortgage options has increased substantially. Mortgages for these kinds of property investments have grown by 45% over the past six months. Product availability has even doubled since August last year.

Rachel Springall from Moneyfacts comments: “Consumers may have taken some time to reflect on staycations in light of uncertainties surrounding international travel and how a holiday let could be a worthy investment.

“Lenders have moved over the past six months to cater to the demand for those looking to invest in property, as there has been a rise in holiday let deals of 45%, and product availability has in fact doubled since August 2020.”

UK staycation boom

Lockdown restrictions have been easing in recent weeks. And from Monday 12th April, UK staycations are allowed in self-contained accommodation for members of the same household. Since Prime Minister Boris Johnson first announced the roadmap out of lockdown, there has been a surge in searches and bookings for short-term holiday lets.

Last-minute ‘minications’ became extremely popular last summer after lockdown restrictions eased. This will likely happen again this spring and summer. With there still being uncertainty around international travel, more people are deciding to remain in the UK this year.

Even before the COVID-19 pandemic, there had been a rise in demand within the short-term let sector. It’s become more common for holiday-makers to want to stay in private accommodation in city, coastal and rural destinations.

Attractive yields and tax advantages

There are a number of benefits to this kind of property investment. With a rise in demand for short-term holiday lets, there is room for growth in the sector. For starters, yields have the potential to be higher than traditional buy-to-lets.

From a tax perspective, furnished holiday lets are treated different to buy-to-let properties. A holiday let is liable to business rates instead of council tax if an owner intends to make the property available to let for 140 days in the upcoming year.

Short-term lets have become a go-to option for property investors. And there will likely be even greater take-up from investors in the coming months and years with increasing interest in UK staycations.

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Mortgage applications are soaring for UK short-term holiday lets


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