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Has The Staycation Market Increased Holiday Let Mortgages?


First Home Fund

A report from Moneyfacts states a significant increase in the number of lenders offering holiday let mortgages over the past six months, which has grown by 45 per cent.


With the continued concerns and restrictions around international travel, more and more consumers now opting to staycation at home. This increased opportunity for potential revenue and likely returns on property investments, added to the minimal if low returns on savings have seen several customers looking to this route as an excellent investment, consequently driving the demand in lenders offering these types of mortgages.


Rachel Springall, finance expert at Moneyfacts, said: “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.


“There are now more lenders offering options than six months ago – back to a spread seen in March 2020 before lockdown began – but it appears that building societies are more inclined to provide deals to meet growing demand, whether for someone who uses their own home or takes out a new loan to fund the holiday let investment. According to a recent survey by Hodge Bank, out of those purchasing a holiday home, 65% take out a new holiday let specific mortgage and 35% remortgage their existing home to finance their holiday home.


“Supply and demand may well be a key issue in 2021 for investors who feel staycations are here to stay awhile yet, and indeed according to Rightmove, national new listings stock is down 25% year-on-year. Any lack of holiday home opportunities will come as frustrating news for investors considering the return of holiday let deals on to the market, especially as sales figures nationally are rising and some consumers have more disposable income from lockdown and are therefore ready to invest. Data from PropertyMark cited that one in nine properties nationally sell more than the asking price, with recent figures hitting a five-year high.


“Clearly, for any opportunities that prospective borrowers are contemplating, it is wise they approach an independent qualified financial adviser to go through the deals currently available and to get some valuable insight into the workings of a holiday let, including tax benefits, rules regarding residency periods, rental income desirability and requirements, and other potential expenses outside of utility bills.”


There is a risk to you and your property if you don't get the right mortgage before renting out your rooms or homes which is why it is always advisable to check with a qualified financial adviser. Click here to get in touch today to discuss any needs you may have with a buy-to-let mortgage.