Buy to let or holiday let? With changes in tax relief for buy to let landlords, that’s now a question for many looking to start or build a property portfolio. If your holiday home meets the relevant requirements, there are a number of tax benefits which don’t apply to buy to let properties,[i] so they can be a savvy investment if you take the correct tax advice. Visit England reported an increase of one million self-catering accommodation bookings in the space of two years[ii], so there’s certainly an appetite in the market
Case profile
We recently helped a client who had been involved in a particularly successful project, resulting in a significant increase in their current and projected income. They decided that they wished to use part of this income to purchase a holiday let in an iconic location in the UK. The property in question was undoubtedly a draw for holidaymakers, however it didn’t have a track record as a holiday let.
Additionally, our client wanted to take out a repayment mortgage, taking them past retirement age without a private pension for a lender to rely on. In fact, our client’s case reflects an overall trend of retirees increasingly looking to the holiday let market, with one online booking site reporting a third of owners registering new properties being over 65s.[i] The combination of factors meant that the client had initially been refused lending, despite their current and projected six figure salary.
Solution
Our Senior Mortgage Manager Devraj Ray was able to overcome these obstacles by providing correspondence from a reputable holiday letting agency in the area, coupled with media articles, proving the iconic nature of the location and therefore its potential to become one of the most sought-after holiday lets in the area. By providing proof of the strength of our client’s future income, the lender was also able to mitigate the risk relating to the lack of private pension and an offer letter was produced within two days.
[i] https://www.thisismoney.co.uk/money/buytolet/article-7329283/Holiday-lets-haven-savings-thanks-staycation-boom.html
[i] https://www.gov.uk/government/publications/furnished-holiday-lettings-hs253-self-assessment-helpsheet/hs253-furnished-holiday-lettings-2018
[ii] https://www.thisismoney.co.uk/money/buytolet/article-7329283/Holiday-lets-haven-savings-thanks-staycation-boom.html
Your home or property may be repossessed if you do not keep up repayments on your mortgage.
The FCA does not regulate some aspects of Buy to Let mortgages.
