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Buy to let mortgages for Holiday Lets

The Ultimate Guide to Financing UK Holiday Lets

Getting started with holiday lets

Owning a holiday let can be a fantastic way to diversify your property portfolio. With ever-growing demand from the UK tourism and staycation sector, there are plenty of opportunities to enter this rewarding market.

Financing a holiday let can be more complex than for standard buy to lets, so there are several factors to bear in mind before making any property investment decisions.

Frequently asked holiday let mortgage questions…


What is a holiday let mortgage?

A holiday let mortgage is specifically for properties that are let out for holidays, and typically just for short periods of time. Some buy to let lenders offer holiday let mortgage products, whereas others only lend on these properties under a broader commercial mortgage remit. Therefore, the best rate for you will depend on your individual circumstances and plans. Working with one of our brokers is essential to finding the best option available to you.


What’s the difference between a holiday let and a buy to let?

A holiday let, or a short-term let, is only rented out by tenants for short periods, typically between two to three nights, a few weeks, and up to a month. On the other hand, a buy to let is a tenant's home and is let out for six to twelve months at a time.


Are holiday lets a good investment?

Yes! Holiday lets offer landlords an excellent opportunity to diversify property portfolios in a growing market. With demand for properties on the rise across all areas of the UK, property investors will benefit from generous rental yields and a profitable long-term investment. There’s also the added perk of being able to enjoy the property yourself throughout the year (subject to your mortgage T&Cs).


Do I need planning permission for a holiday let?

Unless you plan on making any structural changes to your property, you won’t need planning permission to make your property into a holiday let. However, you must ensure you’re on the correct rental property mortgage and that the property has no covenants restricting its use as a holiday let. Some local authorities will insist you have a special license to make a property a holiday let, so it’s essential to review these aspects before getting a holiday let mortgage in place.


Do I pay business rates on a holiday let?

Potentially. Holiday let business rates are separate from council tax, and what you pay will depend on the property type and your circumstances.

Holiday Let Business Rates

Holiday let business rates apply to properties that provide short-term accommodation to guests. As of April 2023, holiday let business rates are only applicable subject to your property meeting specific criteria. This includes the holiday let being available for a minimum of 140 nights over a year and evidence the property was let for 70 nights or more in the last 12 months.

How much you pay in holiday let business rates is based on the value of your property (its size, location, quality, and type) and the potential income you can expect to generate from it.

Council Tax

If your holiday let does not meet the criteria for holiday let business rates, you will be required to pay council tax. Some councils may charge premiums of 200% to 300% for holiday lets, so it’s important to research the area you’re investing in first.


Does Stamp Duty apply to holiday lets?

Yes. With holiday let properties, you are liable to pay Stamp Duty Tax and the additional 3% second home surcharge. It’s also worth noting that Capital Gains Tax may be charged on the disposal/sale of the property, but if you purchase a new business, rollover relief may be available.

Please speak to a professional tax advisor before making any property investment decisions.


How much can you make from a holiday let?

Rental yields on holiday lets are typically higher than what you could achieve on a standard buy to let. As a comparison, average rental yields for vanilla buy to let properties in 2023 were 6.21%, compared to 8.46% for holiday lets.


What mortgage rate can I get for a holiday let?

Rates for holiday lets are typically similar to standard buy to let mortgage rates, and borrowers applying in their personal name are likely to access cheaper rates than for those in Limited Companies. Lenders usually set a maximum loan to value of 75% for holiday let mortgage rates.

As the number of lenders in the holiday let market grows, rate pricing is becoming more competitive. The type of mortgage rate that you could access for a holiday let property will depend on your individual circumstances, letting experience, and the property itself. As such, speak to one of our expert mortgage makers who can guide you in the right direction and advise you on the best mortgage rate to suit your needs.

Our guide to Financing
Holiday Lets

Download our brochure for an overview of how you can finance your holiday let. Whether it's your first investment or your 20th, we've put this guide together to help you get started. 

Our guide to Financing Holiday Lets

Talk to an expert

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