This seems to be a growing market at the minute and it is easy to see why. The returns are typically better than Buy to lets, there are the potential added benefits of having somewhere you can go and stay from time to time (subject to the T&Cs of the mortgage) and I am sure we have all read stories of trying to evict tenants who do not pay on an AST.
We will break down Holiday let mortgages in this post.
What is a holiday let Mortgage?
Lets start with the basics. A holiday let mortgage is quite simply a mortgage on a property that will be let out to people looking for somewhere to stay for a holiday or a break. These could be homes on the coast, in the lake district etc. The big difference is that they are not let out on a standard tenancy agreement.
Benefits of a Holiday let
The big one is you have somewhere to go to on your jollies or a weekend away.
The second is that you are unlikely to get tenants in there who refuse to pay rent or move out as can happen on conventional Buy to lets.
The income can be higher especially during the peak holiday times.
When lenders assess rental income, they will usually do it as an average rental during high, medium and low seasons, this can mean you get a higher rental figure and can mean you increase borrowing secured against the property.
Negatives of Holiday lets
You have to find a new tenant every week.
The costs involved for finding new customers each week.
You probably have to arrange for a cleaner every week.
They are not usually close to home, so if damage is done or you need to arrange for tradesmen to go down you may not be able to go and keep an eye on the property.
Is it a good idea to do Holiday lets?
Personally, having been a landlord in the past myself I think it makes more sense to do holiday lets, but that was because I ended up with a couple of bad tenants. I think also the fact you have somewhere to go for a few days away if you need a break is a nice little bonus.
The income from these properties can also be more than a conventional buy to let, so there is that also. But obviously you will need to do the figures to ensure the income will be sufficient.
How can we help?
We have access to a number of mortgage lenders who offer holiday lets, they all have different requirements and some only lend in certain areas so we can help to filter out the products and lenders you may not be eligible for. We will also deal with the estate agents on your behalf and ensure your application is dealt with as quickly as possible by the underwriters.
Please get in touch, we will be happy to talk through your options and next steps.