BUY TO LET
Holiday Let / AirBnB
Tailored finance for short-term and holiday rental investment properties.
Structuring Finance for Holiday Let Investments
Holiday let and short-term rental finance requires a specialist approach, with lenders assessing income in a very different way to standard buy-to-let properties. At Holbrook Capital Finance, we help investors navigate this market and secure funding that reflects the true earning potential of the property.
The way holiday let income is assessed varies from lender to lender. Some lenders will evaluate a property’s viability based on projected income across low, medium, and peak seasonal periods, while others may use a standard Assured Shorthold Tenancy (AST) rental figure as a benchmark for monthly affordability.
Strong occupancy rates and consistent seasonal demand can make holiday lets an attractive option for both first-time and experienced investors.
Holiday Let Mortgages & Personal Use
When purchasing a holiday let, some applicants may also wish to use the property for personal enjoyment. In these circumstances, we can source regulated mortgage solutions which may allow for a lower deposit requirement compared to a standard holiday let mortgage. Affordability will be assessed based on existing mortgage commitments, alongside the additional borrowing required for the holiday home.
Where the intention to let the property is declared from the outset, certain second-home mortgage products may also permit holiday letting. In most cases, lenders will apply occupancy restrictions, typically limiting personal use to around 12 weeks per year, although this can vary depending on the lender’s criteria.
LOCATION, PROPERTY TYPE, INVESTMENT STRUCTURE
Holiday Let Investment Considerations
Location plays a key role in the performance of a holiday let investment, with properties in high-demand tourist areas often benefiting from stronger yields and more consistent year-round bookings.
Keep in mind that for holiday lets the rental companies generally charge a higher letting percentage: this can vary from 16 - 20% pending on your area and the competition around. The letting percentage a general estate agent will take for a regular buy to let is between 6 and 10%.
Note that many local councils now apply additional council tax premiums to holiday homes, which can significantly increase ongoing costs. In some cases, properties may qualify for business rates instead; however, the most suitable option will depend on your specific circumstances. Careful consideration should be given to ensure the most cost-effective structure is in place for your property.
Additional Factors to Consider
Operating a holiday let involves more than simply welcoming guests. You will need to consider PAT testing, fire door regulations, smoke and carbon monoxide alarms, key management, cleaning schedules, and the provision of fresh bedding between stays.
It is also important to have a reliable network of tradespeople available to deal with any maintenance issues or damage that may occur during a guest's stay, ensuring the property is returned to the required standard before the next guest arrives.
Support Every Step Of The Way
Lenders typically assess experience, property type, occupancy forecasts, and any local licensing or planning requirements when reviewing holiday let applications. Criteria can vary significantly, making lender selection a key part of the process.
Short-term lets can also offer greater flexibility, allowing owners to combine personal use with rental income where required.
With evolving regulations and shifting lender appetite, structuring the finance correctly from the outset is essential. At Holbrook Capital Finance, the focus is on aligning the right lender, structure, and strategy to suit both the property and long-term investment objectives.