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Increased awareness of the staycation sector and the focus on sustainability mean holiday lets will keep attracting landlords, says Andy Virgo of LendInvest.

For obvious reasons, the UK AirBnB and staycation industry has boomed in the past couple of years as uncertainties around travel have kept Brits looking at home for their getaways.

This has rewarded portfolio landlords, who have diversified their properties and found yield in the holiday-let market.

As a grey and cold start of the year is lit up by more and more holiday adverts on our TVs and phones, we are looking again at what holidays we could be enjoying this year.

In keeping with the past two years, the market could maintain its rapid growth as travellers continue to holiday at home; alternatively, fewer travel restrictions could reshape the industry again as people take the opportunity to start going abroad.

After two years of rapid change, what could be in store for the market in the next 12 months?

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The year ahead

Recent history has raised the awareness of the stay-at-home holiday sector a huge amount, in particular the diversity and range of properties available for short-term holiday lets.

This should put the market on a good platform, even with (potentially) increased foreign travel available as the year progresses.

A focus on sustainability and reducing one’s carbon footprint is happening across all areas of people’s lives, and studies are showing travellers keen for ‘green’ holidays, which all plays in favour of the ‘staying local’ holiday market.

Increased foreign travel can be a boon for the sector in this country as well, with more travellers coming into the UK.

The role of the lender in supporting holiday lets

The main differentiators — aside from rates — are how lenders choose to value holiday lets and the flexibility of their criteria.

As more landlords look to diversify their portfolio with these types of let, lenders must be responsive to the needs of the market to support them.

Bricks-and-mortar investments are solid for the long term, which is why the relative ‘gamble’ of a holiday let is a step many are willing to take because the long-term rental and housing markets remain strong.

If demand slips, remortgages to long-term rental deals or selling the home in a buoyant market remain successful outcomes, which lenders should be willing to facilitate.

There remains opportunity for landlords willing to explore holiday lets as a means of diversifying their portfolio.

After two frantic years for the market, we can expect some realignment as things approach a new normal in 2022. But the need for high-quality accommodation — for short or long stays — won’t go away.

Source: Mortgage Strategy

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