| Typical LTV | Up to 75%, some lenders 80% |
|---|---|
| Income evidence | Letting agent projection of low, mid and peak rates |
| Personal use | Often allowed for a limited number of weeks |
| Tax status | FHL tax regime abolished from April 2025 |
| Local rules | Licensing, planning and council tax premiums vary |
| FCA regulation | Usually not regulated |
Who is this for?
- Buyers of cottages or coastal homes to let to holidaymakers
- Owners switching a long-term let to short-term letting
- Investors in serviced apartments or short-stay city lets
- People who want some personal use of a holiday home
How do holiday let mortgages work?
A holiday let mortgage is a specialist buy-to-let loan. Lenders typically assess affordability on projected short-term income, averaged over a year. They usually ask for a forecast from a holiday letting agent showing low, mid and high season rates.
The rent cover test is similar to standard buy-to-let, but often uses a share of the projected income to allow for empty weeks. Some lenders also allow limited personal use of the property each year.
What changed for holiday let tax?
The Furnished Holiday Lettings (FHL) tax regime was abolished from April 2025. Holiday lets are now generally taxed like other residential lets. Individual owners can no longer deduct mortgage interest in full and instead receive a basic-rate tax credit. Capital allowances and certain capital gains reliefs previously available to FHLs have also ended, subject to transitional rules.
From April 2027, separate property income tax rates for individuals are due to rise by two percentage points in England, Wales and Northern Ireland. Speak to a tax adviser before you buy. OMB does not give tax advice.
What local rules affect holiday lets?
Rules differ across the UK and are changing:
- Scotland: short-term lets need a licence from the local council, and some areas are control zones requiring planning permission.
- Wales: councils can charge large council tax premiums on second homes. Properties need to be let for enough days a year to qualify for business rates instead.
- England: many councils charge council tax premiums on second homes. London limits short-term letting of a home to 90 nights a year without planning permission.
Lenders may ask about licensing and planning before lending. Check local rules early.
What are the risks of holiday letting?
Holiday let income is seasonal and less predictable than long-term rent. Running costs are higher, including cleaning, furnishing, utilities and agency commission. Demand can be affected by the weather, the economy and new local rules.
Build in a buffer for quiet months. Lenders choose fewer holiday let products than standard buy-to-let, so rates and fees can be higher.
Which properties suit a holiday let mortgage?
Lenders prefer properties in established holiday areas with proven demand. Coastal towns, national parks and popular rural areas are common. City short-stay flats are accepted by fewer lenders.
The property usually needs to be fully furnished, available for letting for much of the year, and free from restrictions. Some leases, planning conditions or covenants prohibit short-term letting. Your solicitor should check these before exchange. Unusual construction or very remote locations can narrow lender choice.
Do I pay extra stamp duty on a holiday let?
Usually yes, if you already own a home. In England and Northern Ireland, an additional residential property attracts a 5% surcharge on each stamp duty band. Scotland and Wales have their own higher rates. Our stamp duty calculator gives an estimate.
How does OMB help?
OMB is an independent, whole-of-market broker. We compare building societies, specialist lenders and private banks that lend on holiday and short-term lets. We help you gather the right income projections and check that the property and location suit lender criteria. If you plan to own through a company, see limited company buy-to-let.
Run the numbersMaximum loan from rent using lender ICR stress tests (125% / 145%).
Buy-to-let calculatorHow we arrange it
- Free 15-minute call about the property and location
- Gather holiday letting income projections
- Compare holiday let lenders and terms
- Application, valuation and legal work managed
- Completion and review before your deal ends
Example cases
Illustrative examples based on the type of case we arrange. Not specific clients; every case is different.
£371,250 holiday let mortgage at 75% LTV for a Cornish cottage
£245,000 holiday let at 70% LTV in the Lake District for borrowers in their late 60s
£273,000 at 65% LTV switching a Norfolk buy-to-let to a holiday let mortgage
From the blogHoliday lets after the FHL tax changes: does a holiday-let mortgage still add up?
Read the articleFrequently asked questions
How do lenders calculate holiday let affordability?
Most use a holiday letting agent's projection of low, mid and peak season income, averaged across the year. They then apply a rent cover test at a stressed rate, similar to buy-to-let. Some lenders reduce the projected income to allow for empty weeks.
Can I use a holiday let mortgage on a property I stay in myself?
Often yes, within limits. Many lenders allow personal use for a set number of weeks each year. Check each lender's rules, as heavy personal use may mean you need a second home mortgage instead. Your adviser can check this before you apply.
What deposit do I need for a holiday let?
Most lenders ask for at least 25%, with some accepting 20%. Larger deposits typically open up more lenders and better rates. Stamp duty surcharges for additional properties usually apply. Furnishing and set-up costs also need budgeting, as lenders usually want the property ready to let from completion.
Has furnished holiday let tax relief ended?
Yes. The Furnished Holiday Lettings tax regime was abolished from April 2025. Holiday lets are now generally taxed in line with other residential lets, including restricted relief on mortgage interest for individuals. Take tax advice on your position. Transitional rules may apply.
Can I use Airbnb income for a mortgage?
Some lenders accept short-term let income, including platform lettings, using agent projections or a trading history. Criteria for city short-term lets are often stricter than for traditional holiday cottages. Check local planning rules, such as London's 90-night limit. Some leases also ban short lets.
Can I switch a buy-to-let to a holiday let?
You will usually need your lender's permission or a new holiday let mortgage. Many standard buy-to-let mortgages do not allow short-term letting. Check planning and licensing rules for your area too. Letting without consent can breach your mortgage terms. Insurance also needs to cover holiday letting.
Can I buy a holiday let through a limited company?
Yes. Several lenders accept limited company borrowers for holiday lets. Personal guarantees and the usual company criteria apply. Since the FHL regime ended, structure decisions should be reviewed with a tax adviser. Some company mortgages carry higher rates or fees, so compare the overall cost.
Are holiday let mortgages regulated?
Usually not, as they are investment lending. If you plan significant personal use, the loan may be treated as a regulated second home mortgage. Your adviser will confirm which applies. Unregulated loans may not carry every consumer protection, such as access to the Financial Ombudsman Service in some cases.
Important: Most buy-to-let mortgages are not regulated by the FCA. Your property may be repossessed if you do not keep up repayments, and a receiver of rent may be appointed.