Holiday let deals rise as more lenders enter the market

Buy-to-let landlords will find more lenders have come on board to cater to the growing demand for UK holidays, research reveals.

According to an analysis by Moneyfacts.co.uk, there are now more than 300 deals available to holiday let, a growth of 72% since September 2021.

The mortgage options for borrowers looking at holiday lets have increased by 72% since September 2021, rising to 320 options – and the choice is nearly double compared to March 2020.

More lenders have tapped into the holiday let market

The research also shows that more lenders have tapped into the holiday let market this year.

There are now 31 different brands, six more than in September 2021 and 11 more than in March 2020, the majority of which are currently building societies.

However, demand for holiday let properties could change amid Government rules to be introduced in 2023.

Rachel Springall, a finance expert at Moneyfacts.co.uk, said: “The demand for holiday let properties has been evident both from a landlord perspective and holiday makers, so it’s positive to see more lenders entering this niche arena and accommodating borrowers with more product choice.

“There are now over 300 mortgage deals available for landlords to choose from, with building societies dominating this space.

“In March 2020 amidst the pandemic, there were only 20 lenders catering for holiday let borrowers, but this has gradually risen to 31.”

‘Growing choice is good news for borrowers’

She added: “Growing choice is good news for borrowers comparing deals with the most competitive package, and with interest rates rising, it has never been more important to compare the overall cost of a deal carefully and lock into a competitive rate for peace of mind.”

Rachel says that holiday lets can be an enticing prospect for potential investors to earn some extra income, but they will need to do their research to find the right property and location.

Also, using a listing service to get good exposure would help.

Rachel said: “Amid a cost-of-living crisis, holiday makers may forgo a trip abroad and instead pick a vacation closer to home to reduce their costs.

“As we witnessed during the pandemic, demand for UK vacations fuelled the holiday let sector, but this was largely due to consumers feeling discouraged or not able to fly abroad.”

‘Consider the upfront costs to get a property to a high standard’

She added: “Borrowers who are tempted to invest must consider the upfront costs to get a property to a high standard so they can stand out from the competition, but also prepare themselves to experience seasonal dips.

“There are notable Government measures coming into play next year that are likely to impact the holiday let market as homeowners will need to show evidence of their lettings and meet certain criteria to qualify for business rates relief.

“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 under new rules which are to come into force from April 2023.

“It is hoped the changes will protect legitimate holiday let investors and crack down on others but may also deter potential investors who have doubts over meeting the new rules.”

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