Investors tap into holiday let demand
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Investors tap into holiday let demand
Pandemic-related travel restrictions have unleashed huge demand for UK-based rentals among British holidaymakers – with buy-to-let investors scrambling to take advantage.
According to figures1, holiday let mortgage availability has trebled since 2020, giving would-be investors ample opportunity to tap into this demand. There are now 231 buy-to let mortgages eligible for holiday lets on the market, versus just 74 back in August 2020.
As the number of deals increases, competition between lenders is also on the rise, with average rates reducing.
Things to think about
If you’re thinking about investing in a holiday let, there are some factors to consider before taking the plunge. Firstly, the government is currently working to close a tax loophole that has seen people claiming tax relief on empty ‘holiday lets’. Holiday let owners will soon be required to prove that their property is being let for at least 70 days each year in order to claim small business tax relief.
Secondly, it’s important to think about the cost of purchasing a holiday let above and beyond the property itself. For example, you may have to spend a significant amount up front to get the property ready for holiday let clientele. You’ll also have to consider how much the property is likely to generate in rental income – is it in a good enough location to attract a steady stream of holidaymakers?
Get advice
We’ll be able to help you weigh up the various factors and recommend mortgage finance that’s suitable for your needs.
1Moneyfacts, 2022
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.
Information is based on our understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
Tax treatment is based on individual circumstances and may be subject to change in the future.
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