Buy-to-let investors are always keen to look for new opportunities, and over the last few years there have been few bigger opportunities that the boom in the holiday let arena.
We polled brokers recently to get a better insight into their own experience of the holiday let market, and it’s clear that the last couple of years have been a period of significant growth for this sector.
More than half (55%) of intermediaries said they had written a holiday let case over the past 12 months, while more than 84%said they had seen an uptick in holiday let enquiries since the start of the pandemic.
What’s more, almost half (48%) saw a jump in enquiries since restrictions had been lifted.
It would be easy to assume that this interest is solely down to the pandemic. With overseas travel all but impossible, it was understandable that there was then a sharp rise in interest in staycations. People need to take a holiday, after all.
Little wonder then that investors recognised the increased interest, and took advantage by adding holiday lets to their portfolio.
However, that train of thought would suggest that the staycation trend has passed. After all, now that we can holiday abroad once more, will there still be the demand for short-term lets?
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Demand for domestic holidays
The reality is rather different, however, with a host of studies revealing that the appetite among Brits to have at least one holiday on domestic shores remains strong.
For example, the latest study from VisitBritain found 59% of Brits plan to take at least an overnight trip domestically over the next 12 months, compared to 44% who are going to head overseas at some point.
Notably, one in three intend to take more UK trips in the next 12 months than the preceding year.
That’s a pretty strong statement that interest in domestic trips may have been given a helping hand by the pandemic, but that demand is far from dwindling.
Throw in the fact that improved international travel means greater numbers of visitors from abroad heading for our shores, providing more potential tenants for short-term lets, and it’s perhaps not surprising that landlords remain keen on investing in these properties.
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The role of brokers
Mortgage intermediaries are crucial allies for all property investors, irrespective of what form of property they are looking to put their money into.
As a result, brokers will inevitably be hearing from clients in the months ahead who are interested in the holiday let market and how to go about finding finance.
This represents a terrific opportunity for brokers. Holiday let may have traditionally been seen as something of a niche area of the market, a specialist segment which they may have overlooked – not anymore, so it’s crucial brokers get to grips with the subtle ways in which holiday let products differ from traditional buy-to-let deals so that they can help those clients secure the funds they need to add to their portfolios.
Flexibility from lenders
Lenders have a big role to play here. Firstly, across the board we need to do a far better job in educating brokers, helping them understand the intricacies of these holiday let products and how they can support clients in a range of different circumstances.
But we also need to do a better job in highlighting the decision-making process. At HTB for example we put our trust in our manual underwriting process; there’s no relying on automated decisions, which risk unfairly excluding clients who could make a great success of holiday let investments.
Instead, flexible lenders are able to get to grips with the facts about each and every case, nail down the crucial details so that they are able to provide a more informed decision.
The holiday let market has already grown substantially and looks set to play a more important role in the future. It’s therefore vital for brokers to make the most of this opportunity, and for lenders to support them in doing so.
Source: Financial Reporter