As international travel restrictions continue to inconvenience many British consumers, and UK holidays and short breaks remain in vogue, this trend has not escaped the attention of landlords.

The rise of the short-term let and holiday-let markets has created opportunities to generate stronger yields as the ‘staycation’ boom continues to generate heightened demand.

This remains a product type still in its infancy but it requires attention from those landlords who are best placed to take advantage of favourable conditions; and for intermediaries to add value by advising their clients accordingly.

There are 231 BTL deals for holiday lets ­— up 25% in a few months

With some products available only through broker channels, this landlord/adviser relationship is an important one, especially as product numbers rise.

Product explosion

This growth was evident in recent analysis from Moneyfacts, which found there were 231 buy-to-let mortgages eligible for holiday lets, a 25% increase since September 2021. Further back, in August 2020, there were just 74 similar deals.

More lenders are entering this part of the market too, with 27 brands offering holiday-let loans. This is an increase from 25 in September last year and 21 in April.

Given the data, it’s hardly surprising so many landlords are eyeing the holiday-let market

The average cost of fixed-rate mortgage deals available on holiday lets is also becoming more competitive. In January 2022, borrowers paid an average rate of 3.92%, down from 4.14% last September.

With more new entrants likely throughout the year, additional product choice will emerge to accommodate the rising number of bookings for domestic holidays. According to new data from Sykes Cottages, bookings so far this year are up by 22% on those at the same point in 2020, and up by a colossal 158% on last year.

Meanwhile, in a Sykes survey of 1,000 UK holiday goers, 55% said they would still opt for staycations even when all international travel restrictions had been lifted.

Environmental impact

On average, Brits plan to take two staycations in the next 12 months, with almost half (46%) saying limiting their environmental impact is a key consideration. Other factors for opting to holiday closer to home include the ease and convenience (52%) and getting to enjoy the British outdoors (72%).

More lenders are entering this part of the market, with 27 brands offering holiday-let loans

An analysis of income potential found, on average, holiday-home owners earned £28,000 annually per property last year, compared to just under £21,000 in 2019. The figure is set to rise yet again this year as bookings and occupancy continue to soar.

Given the data, it’s hardly surprising so many landlords are eyeing the holiday-let market with such interest and intent.

Whether this is an investment type that suits them or fits their portfolio is a different matter. But it is certainly an area that will continue to generate plenty of column inches and attention for some time to come.