The move aims to support aspiring homeowners who struggle to secure a property in these locations
Leeds Building Society has announced that it is introducing measures to restrict mortgage lending on holiday lets in two key tourist destinations.
The 12-month trial, starting at the end of March, aims to alleviate the housing pressures for aspiring homeowners in areas identified by the local councils as being most impacted by the demand for holiday homes.
The trial will involve updating the building society’s systems to automatically reject holiday let mortgage applications from the specified postcode locations, although existing holiday let borrowers will not be affected by these changes.
In collaboration with North Norfolk District Council and North Yorkshire Council, the mutual moved to address the challenges facing first-time buyers, highlighted by its commissioned research last year.
The research has found that the house price to earnings ratio has surged over the past 40 years, making it increasingly difficult for first-time buyers to enter the property market and that it would take them an average of 12 years to save for a deposit.
According to Generation Rent, the proliferation of over 73,000 holiday homes across Great Britain, particularly in North Yorkshire, has significantly restricted the new supply of homes, exacerbating the situation.
Leeds Building Society’s decision to limit holiday let lending in these areas follows its 2022 initiative to cease funding second residential home purchases, aiming to redirect resources towards assisting individuals in purchasing their first homes, seeking to strike a balance between supporting local housing needs and recognising the economic benefits of tourism.
We’re no longer lending on holiday lets in selected areas. Why? Because we're committed to stop #Losthaven growing by making homes more available 🏡
— Leeds Building Society (@LeedsBS) February 23, 2024
We believe every generation deserves a place to call home.
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“This is another example of how we’re putting homeownership within reach of more people generation after generation,” said Richard Fearon (pictured), chief executive at Leeds Building Society. “In some areas, holiday lets have grown to have a significant stranglehold on the pipeline of homes available for local people to live in, and we want to play our part in removing it.
“There have been a range of measures introduced by government over recent years to give local areas additional powers to restrict holiday lets. This adds to their arsenal of options and does so in a way which leaves power in the hands of local communities.
“We will learn through the trial how effective this measure can be in increasing supply of residential homes and gain greater insight on steps that can make a positive difference.”
Wendy Fredericks, portfolio holder for housing and people services at North Norfolk District Council, welcomed the move by Leeds Building Society to stop new lending on holiday lets in key areas.
“In North Norfolk, we have a really severe shortage of homes that people on local wages can afford,” she said. “Increasing numbers of holiday lets reduce the number of rental homes available for year-round use by local people.”
Simon Myers, executive member for culture, arts and housing, at North Yorkshire Council, said they too were pleased to support this initiative by Leeds Building Society.
“We welcome the fact that it is being specifically targeted at those locations where there are high concentrations of holiday lets,” he said. “At the same time, we feel it strikes a fair balance between the housing needs of local people and the importance of the wider tourism economy of North Yorkshire.”
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