Number of holiday let products rising

The number of holiday let products available in the market has continued to rise since March 2020, according to data collected by Moneyfacts.

The analysis found that there are currently 149 holiday let products, available from 21 lenders.

This is up from October 2020, when there were 103 products available from 17 lenders, and from August 2020, when 74 products were being offered across 14 lenders.

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Looking back to March 2020, there were more products available at 160; however, fewer lenders were offering products, at 20.

Despite the rise in the availability of holiday lets, the average rate has steadily risen since March, from 3.37% to 3.95% now.

Lenders have returned to the holiday let market, back to levels seen a year ago, but the supply of housing overall is failing to keep up with demand, noted Moneyfacts.

Over the past six months, research by Hodge Bank has shown a surge in sales of holiday homes near the coast.

According to Rightmove, new listings of properties overall are not satisfying record buyer demand, with available stock down nationally by 25% year-on-year.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Consumers 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.

“Lenders have moved over the past six months to cater to the demand for those looking to invest in property, as there has been a rise in holiday let deals of 45%, and product availability has in fact doubled since August 2020.

“There are now more lenders offering options than six months ago – back to a spread seen in March 2020 before lockdown began – but it appears that building societies are more inclined to provide deals to meet growing demand, whether for someone who uses their own home or takes out a new loan to fund the holiday let investment.

“According to a recent survey by Hodge Bank, out of those purchasing a holiday home, 65% take out a new holiday let specific mortgage and 35% remortgage their existing home to finance their holiday home.

“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.

“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.”