Holiday let mortgages are reintroduced – but are they a safe bet?

Holiday let mortgages once again offered by Leeds Building Society in anticipation of a staycation boom – but is it wise to invest?

holiday let mortgages: St Ives, Cornwall, by Angela Pham
(Image credit: Unsplash/Angela Pham)

The Leeds Building Society have reintroduced their holiday let mortgage offering – a move to coincide with the reopening of English hotels and holiday destinations. A staycation boom is widely expected this summer – and, who knows, the trend might continue for summers to come as Brits rediscover the pleasures of spending the Great British Summer close to home. 

  • Whatever mortgage you're after, it's more important than ever to find the best mortgage rates for your needs – our guide will help you do just that. 

There are two options for a holiday let mortgage from Leeds: one is an 2.84 per cent fixed mortgage until 30 September 2022 up to 60 per cent LTV (loan to value), or 3.34 per cent fixed until 30 September 2022 up to 70 per cent LTV. Both products come with a free standard valuation, fees assisted legal services, and no product fee. Both mortgages will be available from Thursday 16th July. 

These are both very generous rates on a type of mortgage product that can generate good profit for the investor – provided the property is chosen wisely. Matt Bartle, Leeds Building Society’s Director of Products, said:

'In these uncertain times, we believe many will choose to holiday in the UK this summer and take advantage of our seaside towns and stunning countryside. That could well be a trend that continues so we can expect to see more interest in holiday lets in some of the UK’s sought-after locations. We were the first lender to launch a range of dedicated holiday let mortgages back in 2013, and our research has shown traditional locations such as the South West, Yorkshire and the Lake District remain popular with holidaymakers, with many favouring a coastal break.

'The recent Government announcement on stamp duty is likely to encourage more interest in the buy to let market, including holiday lets. High demand means high returns but it’s important for landlords to remember performance can be seasonal and affected by the weather.

'Buying a holiday let, like any other property investment, does carry risk but enables an investor to diversify their portfolio risk by letting weekly to a range of occupiers, rather than relying on one individual to pay rent every month.' 

Judging by the huge numbers heading to popular UK holiday destinations such as Devon and Cornwall as soon as restrictions were lifted, there is something to the idea of a staycation buzz; it's also worth remembering that some UK locations do well for tourism year after year, so buying a holiday let there is likely to pay off in the long run, even once coronavirus is over.

However, as Realhomes.com Editor-in-Chief Lucy Searle, who has run her own holiday let for 15 years advises, 'Don't under-estimate that this is best approached as a long-term investment, and that you have to go into it prepared to lose money if it all goes horribly wrong. In other words, don't buy a holiday let that you're absolutely dependent on the income for. 

'Secondly, don't under-estimate the amount of admin and paperwork that goes into running one – unless you're going to hand it all or some of it over to a management company, for which you'll pay a fee – you have to be prepared to stay on top of bookings, payments, cleaning, repairs, inventory lists, restocking (yes, holidaymakers do steal stuff), meet and greet, complaints, lost keys, and neighbours complaining about noisy holidaymakers, not to mention the tax returns that come with it. 

'Finally, if you decide to get a holiday let mortgage to find a property abroad, you'll need to cope with local regulations and tax issues abroad, and a potential language barrier on top of all of that. That's not to say it's not a rewarding thing to get into – but it is time- and energy-consuming.'

Whatever your individual circumstance, it's important to start researching mortgages as far in advance as you can. We've teamed with the online mortgage specialist Habito; use their free mortgage comparison tool below, and speak to an expert advisor for unbiased advice.