Holiday home prices surge

Holiday home prices have seen a surge in the last six months due to demand ahead of a staycation summer. Read more to learn more about holiday homes and the mortgages required.;

New data released by a UK lender, shows that the average price of a holiday home has increased by 12% in the last six months.

Prices rising

According to the data from Hodge, the average purchase price for a holiday home in March 2021 was £435,476.

This is 12% higher than October 2020, where the average price was £387,933.

The lender also commented that there had been a 30% increase in holiday let mortgage applications during the same time frame.

Emma Graham, Hodge business development director commented:

“It is not surprising that the popularity of our holiday let mortgage products continue to grow at pace. “

“The stamp duty holiday has no doubt helped drive more interest in second homes, as has the fact that Brits are not yet permitted to holiday abroad and some might also be afraid to do so.”

“When developing our holiday let proposition, we collaborated with our brokers and found their customers wanted more control over their holiday homes so our mortgages allow them to use letting sites such as Airbnb.”

“We also found that owners wanted to enjoy their holiday homes and stay themselves, and so allowing them to stay at the property for up to 90 days per annum has proved very popular.”

Holiday let products

At the beginning of April, with lockdown restrictions starting to lift, a wave of holiday let products were released onto the market.

According to Moneyfacts, the availability for holiday let mortgages increased by 45%.

This is great news for landlords as 2021 looks to be the year of the “staycation” it may prove a good investment opportunity.

Rachel Springall, Moneyfacts finance expert, commented:

“[Borrowers] may have taken some time to reflect on staycations in light of uncertainties surrounding international travel and how a holiday let could be a worthy investment.”

“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,”

Supply and demand

Some of these holiday let products have instead come about from the increased demand seen by lenders, who have carved out space in their product offering for a stand-alone holiday let product.

A selection of the products available require applications to be a landlords already, and others limit the amount of time that borrowers are able to spend in their own property a year.

At Commercial Trust, we have access to over 80 lenders, including those offering specific holiday let products. We are able to assist a range of holiday-let landlords find the right product for them.

Holiday let help

Holiday let buy to let are perfect for people looking for a second home, whether you are looking for an investment property, or a second home to rent out to other holiday makers when you are not there, we can help.

Holiday let mortgages differ from buy to lets as they are short-term lets rather than a traditional buy to let on a longer basis. For a property to qualify as a holiday let, it needs to be let furnished for at least 210 days of the year, leaving you with 155 days that you can potentially enjoy the property too should you wish.

As there is more risk associated with short-term letting, you will need to provide at least a 20% deposit, sometimes more.

Alongside this, you may face higher stress testing and affordability calculations and the lender may also look at your personal income and outgoings alongside the rental yield. This is because there is no guarantee that the property will be let all year round, so you will need to be able to pay the mortgage during off-peak season.

We can help

Don’t know where to start with a holiday let mortgage? We have specialist advisors who are available today to help with your holiday let application. We can assist with:

  • Air BnB and traditional holiday let mortgages
  • Properties in England, Scotland, Wales and Northern Ireland
  • Transfer from residential or buy to let to holiday let mortgage permitted
  • Self-occupancy allowed (subject to conditions)
  • First time holiday let landlords accepted
  • Repayment or interest-only mortgage payment options
  • Special Purpose Vehicle (SPV) and trading limited company holiday let accepted
  • Borrow up to 80% loan to value (LTV)

Not sure which holiday let product would suit your needs? Our advisors are here to help.

Speak to one of our specialist team today and they will find the product that suits your needs. Click here to request a call back or call us free on 0800 032 6388.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.