Do you remember the travel chaos at UK airports during Easter 2022? As Easter got underway many Brits heading abroad were left disappointed, delayed and stranded due to staff shortages in vital areas like security and baggage handling.
This year it has been the turn of those taking the ferry with long delays facing those trying to make their way to the continent via the Port of Dover.
With ongoing issues, thousands will instead be choosing to holiday in the UK creating great returns for holiday let owners and inspiring wider investment in this category.
With 39% of Brits saying they plan to stay in England for their main holiday in 2023, ongoing opportunities are being created for mortgage brokers arranging finance in the holiday let sector.
The opportunity
As a longstanding provider of holiday let mortgages the Harpenden team sees sector trends and what new opportunities are emerging for brokers. High demand for year-round, short-term rentals make a holiday let an attractive investment opportunity for brokers’ customers.
A specialist lenders’ approach
We recommend that any ‘would be’ holiday let owners consider a specialist lender to finance their purchase, a lender with expertise in and best suited to dealing with the unique aspects of buying a holiday let.
In our experience, holiday let purchases are often made by customers with multiple forms of income from a range of financial sources. Mortgage applications assessed by a mainstream lender can’t always accommodate customers with a complex income.
Applications assessed on mass by an algorithm, a popular assessment tool used in isolation by many larger lenders, can be rejected at the first step for those customers with a non-standard financial profile. At Harpenden we manually underwrite every mortgage application helping us to take a considered view; to assess the risk in more detail and to look at the wider picture. We want to say ‘yes’ – with in-depth scrutiny from manual underwriting a complex holiday let mortgage application can often proceed.Â
We also recognise that investing in a holiday let is not just about the money. As such we have included an additional feature which allows the owner to enjoy their holiday let property themselves for up to 90 days per year. As such, an Easter getaway for instance can be a real option for a holiday let owner.
Harpenden’s holiday let product range is not only price competitive but also has some additional, interesting features. There are no restrictions on location for the property purchase giving wider buying options within England and Wales, whether it be in a coastal, rural or city centre location.
Loans of up to £1m are available; Airbnb rentals are accepted; personal income can be used if required to support the loan (top slicing); up to 3 properties on one title will be considered; as are properties above commercial premises; with 75% LTV available on IO and 80% available on repayment. We consider a range of incomes, including pension, trust, investment and maintenance as well as 100% of bonuses, overtime and commission (two years’ proof required).
Our experience in this sector and the refined criteria developed as a result, provides additional safeguards benefitting all those involved in the purchasing process – lender, broker and customer. We use rental income projections when considering applications, as well as taking a holistic view of a customer’s financial circumstances.
New opportunities
The future of UK holiday lets looks strong, year-round. With the current holiday let market providing opportunities for both brokers and their investor customers, a specialist lender like Harpenden is uniquely placed to assist and make that opportunity happen.
Jean Errington is business development manager at Harpenden Building Society
