Options on mortgages for holiday-let investors climb as staycation market booms

A big increase in demand for holiday let properties has led to huge numbers of lenders bringing mortgages to the market to cater for investors.
While the boom in this area of the buy-to-let is good news for possible investors there is one hurdle, however – a lack of homes.
A set of figures show demand is strong another revealed the supply of stock simply isn’t there to meet the need.
Figures out today from Moneyfacts revealed the number of mortgage options for those interested in taking advantage of the UK’s buoyant ‘staycation’ market have grown by 45% in the past six months.
Indeed, availability of these mortgages – which come under the ‘buy-to-let’ umbrella of products – is double that in August 2020, according to the information supplied by Moneyfacts.
Over the same six-month period, there was also a surge in the sale of holiday homes near the coast, according to Hodge Bank.
Lack of news from the government over plans to lift restrictions on overseas travel for UK residents has led to further uncertainty for holidaymakers keen to jet off abroad. This will further fuel the popularity of the UK holiday hotspots this year.
But Rightmove said new listings of properties overall were not satisfying record buyer demand, with available stock down nationally by 25% year-on-year.
Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Supply and demand may well be a key issue in 2021 for investors who feel staycations are here to stay awhile yet, and indeed according to Rightmove, national new listings stock is down 25% year-on-year.
“Any lack of holiday home opportunities will come as frustrating news for investors considering the return of holiday let deals on to the market, especially as sales figures nationally are rising and some consumers have more disposable income from lockdown and are therefore ready to invest.
“Data from PropertyMark cited that one in nine properties nationally sell more than the asking price, with recent figures hitting a five-year high.”
Advice for holiday let investor
Springall explained, for anyone considering investing in a holiday property, it’s a good idea to get advice – especially if you need a mortgage.
She added: “Clearly, for any opportunities that prospective borrowers are contemplating, it is wise they approach an independent qualified financial adviser to go through the deals currently available and to get some valuable insight into the workings of a holiday let, including tax benefits, rules regarding residency periods, rental income desirability and requirements, and other potential expenses outside of utility bills.”
Building societies, the research showed, are more likely to have holiday let mortgages than banks and some deals may only be available through brokers.
Research by Hodge Bank also showed 65% of borrowers take out a new holiday let specific mortgage and 35% remortgage their existing home to finance their holiday home.