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  • Writer's pictureThe Cedar Crest Team

Expats: Rising demand for UK holiday Lets

Updated: Aug 5, 2021

Property investors prepare for a staycation summer



NON-ESSENTIAL INTERNATIONAL TRAVEL TO MANY COUNTRIES AND TERRITORIES IS STILL BANNED DUE TO THE CORONAVIRUS PANDEMIC.


With the newly introduced lockdown restrictions guidelines, the owners of UK holiday let properties could have a busy season and a great return on investment. It’s no wonder, then, that applications for holiday let mortgages have been rising, as many investors look to complete a purchase of a holiday let property ready for this summer’s rush. Lenders are expanding their offerings to meet this growing demand in the short-term holiday let sector. In the past year, more lenders have opened up mortgage options for this type of property investment.


SHORT-TERM LETS TO HOLIDAYMAKERS


Many standard mortgages or buy-to-let mortgages do not allow short-term lets to holidaymakers. A holiday let mortgage is designed with this purpose specifically in mind. It’s to help you buy a property that you don’t intend to live in but will be letting out for short periods.


You can either secure a loan on the property you plan to let out as a holiday home or on your existing home. Rates on these mortgages may be a little higher than for standard mortgages, as lenders may feel they are riskier because occupation of the property can’t be guaranteed.

 

LOCATION IS CRUCIALLY IMPORTANT


When choosing a holiday let property, location is crucially important. Popular areas in the UK include the Lake District, rural Wales, the Cotswolds, and coastal Devon and Cornwall. In part due to these locations, where property prices can be high, holiday homes tend to sell for more than other residential properties. Holiday lets are a popular choice for property investors for several reasons.


Demand for holiday homes in the UK is rising and there is plenty of room for this market to continue growing. Properties in the most desirable vacation spots have a good track record for increasing in value and there’s reason to believe this will continue. And holiday homes have a higher potential yield than long-term rentals, as the nightly or weekly charge can be significantly higher.


 

FURNISHED HOLIDAY LETTING RULES


As a holiday let is classed as a property letting business, if you qualify under the Furnished Holiday Letting rules, you can currently offset the interest on your holiday let mortgage against the rental income you make for tax purposes. So for example, if your holiday let made £12,000 in one year and the interest on your mortgage for that year was £9,000, you would only be liable to pay tax on the £3,000, according to your own tax rate.


 

> AN ATTRACTIVE ALTERNATIVE TO STANDARD BUY-TO-LET <<


Short-term lets have become a go-to option for some property investors. And there will likely be even greater take-up from investors in the coming months and years with increasing interest in UK staycations.

To discuss your mortgage options, contact Cedar Crest Ltd – telephone UK T: +44 (0) 203 883 1017, HK T: +852 6645 4462 – email Info@cedar-crest.co.uk


Your home may be repossessed if you do not keep up repayments on your mortgage.

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