Is now a good time to invest in a holiday let property?

By: Clive Sandom, Corporate Account Manager

When the coronavirus pandemic led to lockdown restrictions early last year, there was a great deal of uncertainty around the holiday let market. Unsurprisingly, the restrictions meant that many people were wary of making travel plans; and the economic disruption led some lenders to halt their holiday let mortgage offerings altogether. However, with many travellers now relying on staycations and lenders opening up more mortgage options, it’s a much more positive outlook for UK holiday lets.

There were already signs of a boom in domestic tourism before the pandemic, with Sykes Cottages reporting that Brits were planning an average of three UK holidays in 2019¹. With the impact of Brexit, as well as a series of heatwaves, it seemed that UK getaways were becoming ever more popular.

Of course, the first lockdown restrictions in early 2020 proved challenging to the industry. The limitations on the population’s movement meant that many were forced to cancel travel plans. And the volatility of the situation meant that some were reluctant to book early as they normally would. In addition to this, the property market itself was heavily affected, as the Government advised people not to complete on new house purchases in the early stages of lockdown. Physical valuations were impossible, and many lenders pulled their holiday let options for mortgages.

However, the market has since seen a substantial recovery. The number of options for holiday let mortgages has grown significantly in recent months and is now similar to before the pandemic began. The easing of lockdown, as well as the vaccination programme, have also meant that holiday plans are back on for many people.

In fact, restrictions on international travel now mean a staycation boom is likely for 2021. Sykes Cottages report high levels of demand for the summer months, with July and August bookings up 126% on last year². Google Trends data also shows a 200% increase in searches for ‘staycation ideas’ in February 2021 compared to the previous time period³. And this demand doesn’t look like it will slow down any time soon.

The industry boom creates a huge opportunity for brokers and their landlord customers. Many are already seizing the chance to invest in the holiday let market. Graham Donoghue, CEO of Sykes Cottages, said: “We’ve witnessed a strong pipeline of enquiries in recent months from those who are new to holiday letting or wanting to rent out their second home to make the most of this staycation boom in Britain.”²

This healthy demand is reflected in the increasing average price for holiday let purchases. Our data shows that the average purchase price has increased by 49% in two years, from £247,831 in 2019 to £369,525 in 2021. Given that holiday let investments offer an average income of £21,000 a year², this may not be too surprising.

For brokers (and their landlord customers) looking to reap the benefits of a holiday let purchase, we’re here to help. As experts in this area of lending, we have dedicated Holiday Let products, as well as colleagues experienced in Holiday Let mortgages. We allow customers to let out via Airbnb, and the landlord can even holiday in their own property (subject to letting remaining the property’s primary purpose). And our proposition is also under constant review.

For more information on our range of Holiday Let mortgages, please visit our Holiday Let page or speak to your dedicated BDM. We can process Holiday Let applications through our new Mortgage Hub, making it simpler, quicker and more automated to submit applications with us.

¹ https://www.sykescottages.co.uk/blog/staycation-index-2019/

² https://www.sykescottages.co.uk/blog/sykes-summer-staycations-boom/

³ https://www.coastandcountry.co.uk/blog/are-holiday-lets-a-good-investment