Lenders offering short-term rental mortgages - Our Recommendations
Posted on 1st March 2022 at 17:36
Since the introduction of harsher taxation in 2017, being the landlord of a long-term let has become a lot less tempting. Higher rates of tax and fewer allowable expenses mean that many landlords are seeing lower returns on their rental income, with profits for some wiped out altogether.
As a result, an increasing number of property owners are looking to short-term rental options. Giving landlords the chance to increase their income, short-term lets allow people who own rental property to make the most of their investment. This increase in short-term lets has encouraged a number of lenders to offer landlords specialist mortgages. Keep reading to find out more.
What is a short-term let?
A short-term let can last anywhere from a night or two to six months. Used by tourists who want an alternative to hotel accommodation, as well as people working or studying in a new location for a limited amount of time, short-term lets are available in every corner of the country. As short-term lets offer guests convenience and comfort, landlords are able to charge their tenants a premium. This is especially true if the property is in a particularly desirable location.
Why do you need a short-term let mortgage?
In 2021, the UK alone hosted 18,995,030 nights stayed, and £2.9 Billion in gross revenue through one advertising channel (Airbnb). Airbnb in particular has aided in bringing the short-term rental model into the mainstream, providing convenience and usability to hosts and guests alike. With demand still on the rise, many investors and landlords look to diversify to plug the gap, meeting the surge in demand for short-term rental properties. Thus, sparking a new surge in an area lenders can no longer ignore due it's impact on the market.
The majority of lenders won’t allow short-term tenancies on a standard buy-to-let mortgage. Therefore, if you are looking to rent your property on a short term basis you will need the correct mortgage in place. This means you need to apply for permission from your lender, or apply for a new mortgage, if you’re going to rent your property out for shorter, more lucrative, periods.
Which lenders offer short-term let mortgages
Over the past few years, there’s been a significant increase in the number of lenders offering short-term let mortgages. These include:
Principality Building Society
Foundation Home Loans
Furness Building Society
Tipton & Coseley
Monmouthshire Building Society
Teachers Building Society
We are noticing more and more lenders offering mortgage products to landlords who intend to operate within the short term rental market. To ensure you get the very best rates, we would recommend you get in touch with our recommended partners Your Keys and Protection (click here to visit site).
Finding a lender offering loans above £500,000
Holiday let mortgages tend to be more complex in nature and therefore speaking to an expert broker is vital. Magni Finance specialises in arranging large and complex loans for the UK and international clients looking to buy or refinance their holiday let properties. They are also able to assist with arranging loans for non-standard property constructions which can be more problematic to lend against.
One of the main reasons landlords choose long-term over short-term lets is that they think short-term options are more hassle. And while it’s true that short-term lets see a higher turnover of tenants, they can still be easy to look after if they’re well-managed. Employing a professional management company to arrange check-ins, check-outs, cleaning and maintenance will take the pressure off of your shoulders. It will also ensure that your property, and your guests, are properly looked after.
If you’d like to find out more about the benefits of short-term lets, or if you want to know more about the services we offer, explore our site or get in touch with a member of our team today.
Share this post: