Rise In Mortgage Deals For Holiday Let Investors | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 06/09/2021

Consumers looking to capitalise on the increase in UK-based holidays will be pleased to see that more lenders have entered this niche mortgage market.

In fact, over the past six months, four more lenders have started offering holiday let mortgage deals, up from 21 lenders in April to 25 lenders this month. During this time, the number of holiday let mortgage deals has also risen, increasing from 149 to 186.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“It’s positive to see a rise in holiday let product choice for landlords over the past few months, but the market is still relatively niche as there are less than 200 deals available. As the demand for staycations remains evident, it would not be too surprising to see more growth in this market in the months to come. In August 2020 only 14 lenders were offering a buy-to-let mortgage available to holiday let, whereas today there are 25 and many of these are building societies.

“The mix of uncertainties this year surrounding international travel has caused demand for holiday lets and, according to Hamptons International, there were 1,404 new holiday let incorporations in England, Scotland and Wales between January and the end of June 2021. They recorded this as the highest number since their records began in 2007, an increase of 83% compared with the number of holiday let companies set up in the whole of 2020 and 119% more than in 2019.

“Whether the appetite for staycations falls into 2022 is unknown but for the moment it's evident landlords are taking advantage of the opportunity to earn an income through holiday lets. Those who may have saved some additional disposable income during the UK lockdown, or are looking for alternative investment opportunities, may then be keen to get involved. Undertaking thorough research into popular locations, weighing up tax benefits, reading up on rules regarding residency periods and other potential expenses outside of utility bills can feel daunting, so seeking advice before entering an arrangement is wise.”

Is a holiday let the right investment for you?

Although holiday lets have become increasingly popular over the last 18 months, once international travel becomes more accessible again it is uncertain as to whether the popularity for UK-based holidays will continue which could have a significant impact on the returns on a holiday let investment. As such, investors should think carefully before going ahead with a holiday let and may want to consider other investment options, such as buy-to-lets instead. Investors can find out more about holiday lets, including the tax implications, by reading our holiday let guide . Meanwhile, some of the alternative investment options are highlighted on our how to invest your money page.

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