Buy-to-let holiday let deals have “bounced back from a substantial drop towards the end of 2022” with more than 400 offers now on the market, data from Moneyfacts shows.
The data group says mortgage options for borrowers looking at holiday lets have more than doubled to 411 loans, from 173 in October.
It adds that There are now 34 different lenders in this market, eight more than in October, the majority of which are building societies.
The group points out: “Government rules to be introduced in 2023 impact the demand for holiday let properties, but the cost-of-living crisis may encourage demand for UK holidays over a trip abroad.”
Under new council tax and small business rate rules from 1 April, holiday lets will need to be rented for a minimum of 70 days a year and available to be rented out for 140 days a year. Homeowners will need to show evidence of their lettings and meet certain criteria to qualify for business rates relief.
The new rules are designed to differentiate business investors from second home owners.
Moneyfacts finance expert Rachel Springall says: “Due to the pandemic, there was a huge demand for UK-based holidays, so BTL investors could have seen the potential to dip into holiday lets.
“As the holiday aspirations of consumers change, demand for UK holidays could fall, but at the same time, the country is facing a cost-of-living crisis which may keep them interested in a more cost-effective UK break. However, rising interest rates may well dent the profit margins of investors during 2023.
She adds: “Landlords may be dipping into their savings due to the cost-of-living crisis, and the expense to redevelop a property to a high standard may be more now than in previous years.
“Mortgage interest rates have risen over the past year, so it is imperative prospective landlords seek advice to compare their options and consider a fixed rate deal for peace of mind.
“Investors picking a property with their head over the heart is extremely wise, and in-depth research must be done on locations and listing services to ease any concerns over letting exposure and seasonal dips.”
