Demand for holiday let finance continues to grow despite a series of tax and regulatory changes affecting the sector, new research carried out by The Cumberland Building Society reveals.

The research found that 88% of mortgage brokers have seen an increase in holiday let mortgage enquiries over the past 12 months, with 32% reporting a significant increase.

It reveals that only 8% reported a decline in enquiries.

The findings suggest that holiday lets continue to attract investor interest despite significant changes to the market over recent years.

Higher yields compared with traditional buy-to-let (BTL) investments were identified as the leading reason clients are entering the holiday let sector, cited by 32% of brokers.

Regulatory changes affecting the traditional buy-to-let market were the second most common driver, highlighted by 16% of respondents.

The research comes at a time when landlords continue to assess the impact of changing tax rules, compliance requirements and wider reforms affecting residential investment property.

The Cumberland’s Holiday Let Index was coordinated by Pegasus Insight, through a quantitative online survey of mortgage brokers, private landlords and holiday let homeowners.

Cumberland Building Society head of intermediary lending Grant Seaton says: “What’s interesting is that we’re seeing demand increase despite a series of well-publicised tax and regulatory changes affecting property investors.”

“The assumption in some parts of the market has been that these changes would reduce appetite for holiday lets, but the research suggests investors are continuing to assess the opportunities available and the returns that can be achieved.”

“We’re also seeing wider changes across the property investment space. As landlords review their options, many are taking a fresh look at holiday lets alongside more traditional buy-to-let investments.”

“For brokers, that means having a good understanding of how the sector works, what borrowers are trying to achieve and where specialist support can add value.”

Pegasus Insight founder and managing director Mark Long adds: “What stands out from the research is that this momentum is not simply coming from people entering property investment for the first time.”

“Brokers are also seeing more experienced and professional landlords considering holiday lets, which could tell us something about how the sector is developing.”

“As established landlords reassess their portfolios, holiday lets offer exposure to a different part of the property market, with a different income model to conventional buy-to-let. That does not mean they are right for every investor, but it helps explain why demand can remain strong even against a more challenging tax and regulatory backdrop.”