Data also shows that more lenders have entered the market
Mortgage options for borrowers looking at holiday lets have increased by 72% over the past year, data analysis by price comparison website Moneyfacts.co.uk has revealed.
According to Moneyfacts, the increased demand for UK holidays has been evident in recent years, and buy-to-let landlords will find more lenders have come on board to cater to that demand.
There are now 320 deals available to holiday let, nearly double the number of options in March 2020, when the COVID-19 pandemic restrictions were implemented.
More lenders have also tapped into the holiday let market this year. There are 31 different brands today, six more than in September 2021, and 11 more than in March 2020, the majority of which are currently building societies.
“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,” Rachel Springall, finance expert at Moneyfacts.co.uk, said. “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.
“Holiday lets can be an enticing prospect for potential investors to earn some extra income, however, they will need to do their research to find the right property and location and perhaps use a listing service to get good exposure.”
Springall pointed out that holiday makers may forgo a trip abroad and instead pick a vacation closer to home to save money amid a cost-of-living crisis.
Read more: Holiday lets UK – how are they holding up given the current financial climate?
“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,” she said. “UK holidays could then still be a profitable investment for landlords as consumers scrutinise their budgets and perhaps forego a trip abroad.
“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.”
Springall also noted that 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,” she explained. “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.”
