Holiday let mortgages are a specialist category of UK property finance, distinct from standard buy-to-let mortgages. For expats and overseas investors looking to purchase UK holiday accommodation, accessing the right lender and product is essential. This guide explains how holiday let mortgages work and what you need to qualify. For more information, see HMRC guidance for overseas income.
What Is a Holiday Let Mortgage?
A holiday let mortgage is a specific type of mortgage for properties that are let to guests on a short-term basis, typically through platforms such as Airbnb, Vrbo, or direct bookings. Holiday lets are distinct from standard buy-to-let because the property must be available for letting for at least 210 days per year, must be actually let for at least 105 days per year to qualify as a Furnished Holiday Let (FHL), and no single letting period can exceed 31 consecutive days.
Furnished Holiday Let Criteria for Mortgage Purposes
Lenders assessing holiday let mortgage applications look at projected rental income rather than a fixed tenancy agreement. They will typically request a valuation report that includes a projected rental income assessment (peak, mid, and low season), stress-test affordability at 125-145% of the mortgage payment using a blended rental income figure, and consider the location and type of property when assessing income viability.
Can Expats and Non-Residents Get Holiday Let Mortgages?
Yes, though the market is smaller than for standard buy-to-let. A number of specialist lenders will consider holiday let applications from UK expats and non-resident overseas investors. Requirements typically include a minimum 25-30% deposit, evidence of ability to manage the property or a letting agent agreement, verifiable income independent of the holiday let income, and a property located in an established holiday let market.
Popular UK Holiday Let Locations
Popular UK holiday let locations for overseas investors include Cornwall and Devon, the Lake District, Cotswolds, Scottish Highlands and islands, Yorkshire Dales, London for short-stay urban lettings, and North Wales and Pembrokeshire.
Holiday Let vs Buy-to-Let: Which Is Better for Overseas Investors?
Holiday lets can generate higher gross yields than standard buy-to-let in the right locations, but they also carry higher vacancy risk and management complexity. For overseas investors who cannot be on-site, a professional holiday letting agency is essential. Costs including agency fees (typically 20-30%), cleaning, and maintenance are higher than for standard tenancies.
Frequently Asked Questions
Can I get a holiday let mortgage as a non-UK resident?
Yes. Several specialist lenders offer holiday let mortgages to non-resident applicants. A larger deposit is typically required and you will need to demonstrate how the property will be managed in your absence.
What is the minimum deposit for a holiday let mortgage?
Most holiday let lenders require a minimum 25% deposit, with some requiring 30% or more for non-resident applicants.
How is rental income assessed for a holiday let mortgage?
Lenders use a projected rental income figure from a RICS surveyor or specialist lettings valuation, typically blending peak and off-peak season figures. The mortgage payment must typically be covered by 125-145% of the blended income figure.
Can I use a holiday let property myself?
Yes. Mortgage lenders generally allow personal use of holiday let properties. However, excessive personal use relative to letting availability can affect Furnished Holiday Let status. Seek advice from a tax adviser on managing personal vs commercial use.
Are holiday let mortgages more expensive than buy-to-let?
Holiday let mortgage rates are generally slightly higher than standard buy-to-let rates due to the more specialist nature of the product. However, the potential for higher gross yields can more than offset the rate difference in strong holiday let locations.
Speak to a Specialist
The Mortgage Story arranges mortgages for expats, foreign nationals, and overseas investors across the UK. Whole-of-market access. No obligation consultation.
Your home may be repossessed if you do not keep up repayments on your mortgage. The Mortgage Story is a trading style of The Mortgage Story Ltd, which is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, authorised and regulated by the Financial Conduct Authority (FRN: 991223). This guide is for general information only and does not constitute financial advice.
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