The number of mortgage options for landlords looking at holiday lets has increased to 445, up from 362 a year ago.
That’s according to Moneyfactscompare.co.uk, which said “the rise in choice is promising, but other challenges lie ahead”.
The financial information provider found that 34 different lenders now offer short-term let or holiday let mortgages to landlords, two more than in August 2023.
The cost of holiday let mortgages has also come down over the past year, from 7.16% to 6.2%. However this is still significantly higher than the average 4.65% deals on offer two years ago, meaning landlords coming to the end of a two-year fix could see stark payment shock when they come to remortgage.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “The buy-to-let market has undergone its fair share of upheaval over the past few years, with rising interest rates and tax perks quashed.
“However, a small part of this market has flourished over the past couple of years, with the availability of holiday let deals rising. There has also been an encouraging increase in the number of lenders prepared to cater to these types of landlords.
“There are over 400 deals for consumers to choose from and the majority of lenders that currently operate within this space are building societies.”
Changing rules
Despite the wider availability of these mortgages and falling interest rates, landlords operating in this niche sub-sector face potential difficulties ahead.
It is expected that from April 2025, the tax advantages for furnished holiday lettings will be abolished, as announced by the previous Government in the March 2024 Budget.
It said that scrapping the Furnished Holiday Lettings Tax Regime would make the property tax system fairer and more efficient, as well as “levelling the playing field between short-term and long-term lets, supporting people to live in their local area”.
But, of course, that comes at a cost for some landlords.
Springall added: “These changes will no doubt come as a blow to both existing and prospective landlords, but the demand and profitability of a holiday let could still be worth weighing up.
“It would be wise for new investors to do their research and pick a property to let with their head, not their heart, and getting advice from a listings service is also wise to explore seasonal dips.”
