Research by Suffolk Building Society has revealed nearly one in five UK adults contemplated buying a holiday let property during the pandemic, when overseas travel become restricted.
The mortgage lender said it had seen the number of completions on holiday-let purchase double between 2020 and 2021.
It appears to be the younger generations driving this trend, with those aged 18 to 34 being the most likely to have considered a holiday let property in the last 24 months.
But whilst it may seem a tempting market to enter, the building society is concerned many budding investors are jumping in without any previous experience or knowledge and this could pose a risk.
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Charlotte Grimshaw of Suffolk Building Society said new investors to this market should be aware of certain rules lender put in place on holiday lets which may restrict their ability to take out a mortgage.
She said: “It will be important to check they have realistic expectations, with many lenders’ criteria including minimum ages and a requirement to already be a homeowner. Brokers can play an important role here in helping prospective short-term landlords assess their options.”
She said those interested in holiday lets should first try their hand at buy-to-let as a way of gaining additional income and experience with longer-term tenants before branching out into the holiday market.
Restrictions
Charlotte also warned not all lenders would allow the buyer to market their property on short-term lettings sites such as Airbnb and Vrbo. And she said properties in holiday parks, caravans or lodges, and those of unusual construction method may not always be accepted by lenders.
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“It’s easy to understand why the idea of owning a holiday let home is so attractive,” she added. “As people were limited to holidaying in the UK, often within an area they know and love, their eyes were opened to the opportunity of increasing their income, as well as enjoying a property for personal use too.
“However, intermediaries should also advise their clients to take the time to understand the market and check out the competition before falling in love with a property that isn’t viable in terms of lettings.”
The survey revealed, of those who expressed their interest in becoming a holiday let landlord, almost a third, (32%) said Covid-related restrictions inspired them to look into holiday lets, however, half (50%) claimed it was always part of their plan.
Devon and Cornwall were the locations that most wannabee holiday let landlords were considering, followed by the Lake District, Peak District and Yorkshire Dales.
By Kate Saines
Source: What Mortgage