Leeds BS to restrict holiday let mortgages in tourist hotspots

Leeds Building Society has announced that it will restrict mortgage lending on holiday lets in two popular tourist destinations.

The society has worked with North Norfolk District Council and North Yorkshire Council to set up a 12-month trial during which it will stop new loans for holiday let homes.

Each authority has identified where housing pressures are most serious and holiday let lending will be restricted in those areas from the end of March.

The announcement follows new short-term let planning permission rules announced by the government earlier this week.

It also follows a similar decision by the Society in 2022 when it pulled out of funding purchases of second residential homes.

According to Generation Rent, there are more than 73,000 holiday homes in Great Britain, with latest figures showing an annual increase of 7,000; North Yorkshire was one of seven areas where the growth in holiday homes effectively cut new supply of homes by half.

The chosen postcode locations will be added to the building society’s systems to prevent any holiday let mortgage applications received in those areas from being approved.

Leeds Building Society's chief executive, Richard Fearon, said: “This is another example of how we’re putting homeownership within reach of more people generation after generation. In some areas, holiday lets have grown to have a significant stranglehold on the pipeline of homes available for local people to live in and we want to play our part in removing it.

“There have been a range of measures introduced by Government over recent years to give local areas additional powers to restrict holiday lets. This adds to their arsenal of options and does so in a way which leaves power in the hands of local communities.

“We will learn through the trial how effective this measure can be in increasing supply of residential homes and gain greater insight on steps that can make a positive difference.”