Home Lead Story Holiday let deals return as lenders cater to demand

Holiday let deals return as lenders cater to demand

by LLP Editor
8th Apr 21 9:31 am

The impact of the lockdown and lack of opportunity for international travel may well have incited consumers to consider staycations and, for those who are able to invest, a holiday let could seem appealing. The latest analysis by Moneyfacts.co.uk reveals a notable rise in the number of buy-to-let options for holiday let over the past six months, during a surge of holiday home sales.

Mortgage options for borrowers looking at holiday lets have grown by 45% in the past six months and product availability is double that in August 2020.

Over the past six months, research by Hodge Bank shows a surge in sales of holiday homes near the coast.

Lenders have returned to the holiday let market, back to levels seen a year ago, but supply of housing overall is failing to keep up with demand. Indeed, according to Rightmove, new listings of properties overall are not satisfying record buyer demand, with available stock down nationally by 25% year-on-year.

Buy-to-let mortgage market analysis
BTL options available

(fixed and variable)

Mar-20 Aug-20 Oct-20 Now
Available to holiday let 162 74 103 149
Lenders offering holiday let deals 20 14 17 21
Average fixed rate available to holiday let 3.37% 3.53% 3.79% 3.95%
Source: Moneyfacts.co.uk

Rachel Springall, Finance Expert at Moneyfacts.co.uk, 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.”

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