Holiday let deals rebound by 138% in January: Moneyfacts

Holiday let deals have bounced back from a substantial drop towards the end of 2022, with more than 400 deals now available on the market, according to new data from Moneyfacts.

Mortgage options for borrowers looking at holiday lets have increased to 411 options, up from 173 seen in October 2022 - an increase of 138%.

More lenders have also returned to the holiday let market. There are now 34 different brands, eight more than in October 2022, the majority of which are currently building societies.

Rachel Springall, finance expert at Moneyfacts, said: “The outlook for buy-to-let product choice in the holiday let market took a nosedive in the aftermath of the fiscal announcement, so it’s positive to see product availability bounce back. Lenders have returned to the market and average rates have come down since October 2022, but as seen in the wider buy-to-let market, it may take time for more improvements to surface. Building societies continue to dominate this space and overall, there are more than 400 deals to choose from, covering both fixed and variable rate options.

“Due to the pandemic, there was a huge demand for UK-based holidays, so buy-to-let investors could have seen the potential to dip into holiday lets. As the holiday aspirations of consumers change, demand for UK holidays could fall, but at the same time, the country is facing a cost of living crisis which may keep them interested in a more cost-effective UK break. However, rising interest rates may well dent the profit margins of investors during 2023 and, on top of this, the Government is due to make reforms which will impact holiday let investors. Holiday lets will need to be rented for a minimum of 70 days a year and available to be rented out for 140 days a year, and homeowners will need to show evidence of their lettings and meet certain criteria to qualify for business rates relief. These new rules are due to come into force this April and are designed to protect legitimate investors.

“Landlords may be dipping into their savings due to the cost of living crisis, and the expense to redevelop a property to a high standard may be more now than in previous years. Mortgage interest rates have risen over the past year, so it is imperative prospective landlords seek advice to compare their options and consider a fixed rate deal for peace of mind. Investors picking a property with their head over the heart is extremely wise, and in-depth research must be done on locations and listing services to ease any concerns over letting exposure and seasonal dips.”