Investors tap into holiday let demand

Pandemic-related travel restrictions have unleashed huge demand for UK-based rentals among British holidaymakers – with buy-to-let investors scrambling to take advantage.

According to figures1, holiday let mortgage availability has trebled since 2020, giving would-be investors ample opportunity to tap into this demand. There are now 231 buy-to let mortgages eligible for holiday lets on the market, versus just 74 back in August 2020.

As the number of deals increases, competition between lenders is also on the rise, with average rates reducing.

Things to think about

If you’re thinking about investing in a holiday let, there are some factors to consider before taking the plunge. Firstly, the government is currently working to close a tax loophole that has seen people claiming tax relief on empty ‘holiday lets’. Holiday let owners will soon be required to prove that their property is being let for at least 70 days each year in order to claim small business tax relief.

Secondly, it’s important to think about the cost of purchasing a holiday let above and beyond the property itself. For example, you may have to spend a significant amount up front to get the property ready for holiday let clientele. You’ll also have to consider how much the property is likely to generate in rental income – is it in a good enough location to attract a steady stream of holidaymakers?

Get advice

We’ll be able to help you weigh up the various factors and recommend mortgage finance that’s suitable for your needs.

1Moneyfacts, 2022

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

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