Holiday Let Mortgages UK
Who qualifies for a UK holiday let mortgage in practice?
A holiday let mortgage is specialist buy-to-let finance for a property let to a series of short-term paying guests rather than on a long-term assured shorthold tenancy. It is the only mortgage product that permits this use. Standard residential and standard BTL mortgages prohibit short-term letting, and using a property on the wrong mortgage is a breach of terms. The right product depends on whether the property is marketed and let commercially throughout the year, the location's holiday let demand profile, and the borrower's wider income position.
Fox Davidson arranges holiday let mortgages from £250,000 up to £250 million across England, Scotland and Wales, including the specialist Scottish short-term let market we have been active in since 2013. We work with the full holiday let lender panel: the dedicated building societies that have operated in this space for years, the specialist BTL lenders with holiday let permission, and the small number of lenders active on larger luxury and portfolio holiday let cases.
Buying as a higher rate taxpayer? Run the FCA HNW qualification check. Many holiday let portfolio investors qualify for the FCA high net worth rules which unlocks the private bank route as a parallel option to specialist holiday let lending.
Specialist UK Holiday Let Mortgage Broker
Holiday let lending sits outside the panel of most generalist brokers and outside the direct products of almost all high street banks. The active holiday let lender panel is narrow, criteria are location-specific, and the income assessment method applied by the chosen lender is the single biggest driver of usable loan. Applying to the wrong lender typically costs four to six weeks and a valuation fee.
What we have seen since the April 2025 FHL abolition is a sharper split between casual operators and serious holiday let portfolio investors. The serious end of the market has restructured into limited companies, taken professional tax advice, and started treating holiday let as a business rather than a lifestyle asset. The casual end has either withdrawn or moved to standard AST. The lender panel has narrowed slightly in response and rate spreads have widened for non-standard cases.
Lending From £250,000
We arrange holiday let mortgages from £250,000 to £250 million. 75% maximum LTV at building society level. 80% at specialist level on strong cases. Limited company products from a narrower panel.
Three Income Methods Assessed
Comparable AST rent at 145% ICR / qualified letting agent projection / actual trading history from platform host reports. We match the method that gives the best outcome before instruction.
Scottish Licensing Specialism
Active in the Scottish short-term let market since 2013, before the 2023 licensing scheme came in. Direct experience of Edinburgh control zone applications and Highland licensing.
Full Lender Panel
Cumberland, Leeds, Furness, Harpenden, Tipton, Monmouthshire (building society panel) plus Shawbrook, Paragon, Hodge, Landbay, West One, Precise, LendInvest (specialist BTL).
Post-FHL Tax Modelled
We model the mortgage position under both personal name and limited company so your accountant can see the numbers. Section 24, capital allowances, pension status and CGT all factored.
Regional Compliance Native
Scottish short-term let licensing, Welsh 252/182 evidence, London 90-night cap, English Article 4 directions in Bath, Brighton and Cornwall. We handle the regulatory evidence at submission.
Which lenders we work with for holiday let mortgages
The specialist holiday let lender panel in 2026 centres on the dedicated building societies that have operated in this space for years, alongside the specialist BTL lenders with holiday let permission, plus a small number of lenders active on larger luxury and portfolio holiday let cases. Each lender has its own criteria and the right lender for a given case depends on location, property type, borrower profile and ownership structure.
- Dedicated holiday let building societies: Cumberland (dominant in the Lake District and northern England), Leeds Building Society (UK-wide), Furness (strong on Cumbria, Lakes, North West), Harpenden, Tipton, Monmouthshire. Building society panel typically uses AST comparable rent at 145% ICR for the assessment.
- Specialist BTL lenders with holiday let permission: Shawbrook, Paragon, Hodge, Landbay, West One, Precise. These lenders typically accept agent income projections or trading history and price slightly above the building society panel.
- Larger luxury and portfolio holiday let lenders: LendInvest on larger loans, Hodge for limited company portfolio holiday let, private banks (Coutts, Weatherbys, Investec) for HNW investors with holiday let as part of a broader portfolio under the FCA high net worth definition whole-of-wealth assessment.
- Scottish holiday let panel: Cumberland, Leeds, Furness and the specialist Scottish building societies all active. Shawbrook and Paragon for limited company Scottish cases. Edinburgh control zone applications need the licensing evidence at submission.
- Welsh holiday let panel: Building society panel active where the property meets the 252/182 rule. Specialist BTL lenders for properties that fall below the threshold or sit in the second home council tax regime.
The realistic route for London short lets is a standard BTL with short-let permission up to 90 nights, sitting within the letting terms of the mortgage. Dedicated holiday let mortgages on London property are rare because of the Deregulation Act 2015 90-night cap.
How lenders assess holiday let income
Holiday let income is seasonal, variable and location-dependent, which is why lenders use three different assessment methods rather than a single standard. The method that applies is driven by the lender, not the applicant, and it is the single biggest factor in how much you can borrow.
| Method | What it uses | Typical lender | Outcome |
|---|---|---|---|
| 1. AST comparable rent | Open market 12-month AST rent for the property at 145% ICR / 5.5% stress on personal name (125% / 5.5% on limited company) | Cumberland, Leeds, Furness, building society panel | Most conservative. Lowest borrowing figure. Safest for the lender because AST rent is well-evidenced. |
| 2. Agent income projection | Written projection from an ARLA-qualified or RICS-registered letting agent showing low, mid and high-season weekly rates, weighted across 30 weeks per year for voids and owner use | Shawbrook, Paragon, Hodge, specialist BTL with holiday let permission | Higher borrowing figure than AST in genuine tourist locations. Requires recognised agent active in the local market. |
| 3. Actual trading history | Platform host reports (Airbnb transaction history, Vrbo, Sykes statements), bank statements showing income receipts, and where available two to three years of formal accounts. Minimum 12 months trading, some lenders 24 months. | Shawbrook, Paragon, specialist BTL panel for well-performing trading properties | Highest borrowing figure on a well-performing property. Widest lender panel on remortgages and trading purchases. |
Personal income matters alongside property income. Most holiday let lenders require minimum personal income of £20,000 to £40,000 evidenced separately, to cover voids and ongoing cost. A small number of specialist lenders will lend on property income alone for experienced operators with strong trading history, but the panel narrows. Retired applicants with pension income that meets the minimum threshold are accepted by most building societies and specialist lenders.
How Fox Davidson Arranges Your Holiday Let Mortgage
Holiday let applications take longer than standard BTL because of the specialist underwriting and the income evidence requirement. Allow six to ten weeks from instruction to offer, then conveyancing and completion.
Step 1: Ownership Structure and Lender Fit
The buyer confirms ownership structure (personal name or limited company) with the accountant given the post-April-2025 Section 24 position. We then identify the two or three lenders whose criteria fit the property location, property type, borrower profile and income assessment method that gives the best outcome. Done before any credit search or valuation.
For Scottish applications, we confirm short-term let licensing status. For Welsh applications, we confirm 252/182 evidence. For English applications in known Article 4 areas (Brighton, Bath, Cornwall), we confirm planning compliance position.
Step 2: Income Evidence and Documentation Pack
On a purchase with no trading history, we commission a written projection from an ARLA-qualified or RICS-registered letting agent active in the area, showing low, mid and high-season weekly rates. On a purchase of a trading holiday let, we gather two years of platform host reports, bank statements and any existing accounts. The income evidence dictates which lender and which assessment method applies.
Document pack: three months of personal bank statements, three years of SA302s and tax year overviews for personal name borrowers, SPV accounts or first-year SPV confirmation for limited company cases, the income projection or trading evidence, deposit proof with three to six months source of funds, ID, building insurance schedule. Scottish applications add the short-term let licence or licence application. Welsh applications add the 252/182 evidence.
Step 3: Application, Valuation and Completion
The lender instructs a surveyor familiar with the local holiday let market. The valuer confirms the property is of standard construction, comments on the holiday let income projection, assesses market rent and reports any defects. Expect 7 to 14 days from valuation instruction to report.
Typical holiday let underwriting sits at three to five weeks on specialist lenders, with building society lenders often running slightly longer. Total six to ten weeks from instruction to mortgage offer on a well-prepared case. Conveyancing and completion add a further three to six weeks.
£425,000 Cotswolds cottage, two-year trading history
A 2025 case arranged by Fox Davidson, anonymised. Buyer was a 52-year-old higher rate taxpayer with personal income of £110,000 from a main employment and no prior BTL experience. Target property was a three-bedroom stone cottage in a Cotswolds village with established tourist footfall, priced at £425,000. The seller operated the cottage as a holiday let on Sykes achieving gross income of £42,000 per year over the trailing two years.
The application was structured through a newly-incorporated SPV on tax advice from the buyer's accountant, reflecting the post-April-2025 Section 24 position. Deposit was £106,250 (25%), plus SDLT of £33,250 (residential rates with the 5% additional dwellings surcharge, paid by the company) and conveyancing, valuation and arrangement fees of approximately £8,500.
The lender chosen was a specialist BTL holiday let product from Cumberland, using the two-year trading history as the income assessment method. At £42,000 gross annual income against a £318,750 loan at 5.69% on a 5-year fixed rate, the ICR sat comfortably above the lender's 125% at 5.5% limited company requirement. Valuation confirmed £430,000. The mortgage offer was issued seven weeks after application. Completion followed three weeks later.
The structuring decision around limited company ownership saved the buyer approximately £5,400 per year in tax compared with personal name ownership under the post-April-2025 Section 24 rules, which more than offset the small rate premium and the company admin cost.
How regional regulation shapes the lender approach
The regulatory landscape for short-term letting has tightened sharply across the UK over the past five years, and lenders now routinely require evidence of compliance with the local regime before issuing an offer. The detail differs meaningfully by jurisdiction.
Scotland: short-term let licensing
All short-term let operators have required a licence from the local authority since 1 October 2023 under the Civic Government (Scotland) Act 1982 short-term lets licensing scheme. Edinburgh has additionally declared a short-term let control area under planning law, requiring planning permission for change of use to short-term letting on most new applications. Mortgage lenders require evidence of a valid licence (or licence application in progress with local authority confirmation) before issuing a holiday let offer on any Scottish property. Applications for licence-refused properties are declined. Scottish LBTT on a second or investment property carries an 8% Additional Dwelling Supplement (raised from 6% in December 2022) on top of standard LBTT rates.
Wales: 252/182 rule
Welsh holiday lets must be available for letting for 252 days per year and actually let for at least 182 days per year to qualify for non-domestic business rates rather than second-home council tax. Properties that do not meet the threshold fall into the second-home council tax regime, which attracts a council tax premium of up to 200% depending on the local authority. Some Welsh local authorities are consulting on introducing statutory registration schemes for holiday lets, with introduction expected in 2026 or 2027. Mortgage lenders typically require the property to meet the 252/182 rule on application.
London: 90-night cap
The Deregulation Act 2015 limits entire-property short-term letting in Greater London to 90 nights per calendar year, unless the host has obtained planning permission for change of use. Most London councils treat short-term letting above 90 nights as a material change of use requiring planning permission, and Article 4 directions are in place in some boroughs restricting such change. Dedicated holiday let mortgages are therefore rare on London property. The realistic route for London short lets is a standard BTL with short-let permission up to 90 nights, sitting within the letting terms of the mortgage.
England (non-London): Article 4 and statutory registration
A statutory short-term let registration scheme for England is in active consultation under the Levelling Up and Regeneration Act 2023 and is expected to commence in 2026 or 2027. Some local authorities (Brighton, Bath, Cornwall) have already introduced Article 4 directions removing permitted development rights for change of use to short-stay accommodation in specific areas. Lenders are increasingly requiring evidence of planning compliance where Article 4 applies.
What changed when FHL was abolished in April 2025
The Furnished Holiday Lettings tax regime was abolished on 6 April 2025. Holiday let income is now taxed on the same basis as standard residential rental income, removing the four material advantages the FHL regime had previously offered. This is the single biggest change to holiday let ownership in a generation and has reshaped the economics of personal name ownership in particular.
Change 1: Section 24 mortgage interest restriction
Under the FHL regime, holiday let mortgage interest was fully deductible as a business expense against rental income before tax. From 6 April 2025, personal name holiday let owners are subject to Section 24 restrictions, meaning mortgage interest is relieved only as a 20% basic rate tax credit. For higher and additional rate taxpayers, this reduces the effective interest relief from the marginal rate to 20% and materially increases the tax burden on geared holiday lets.
Change 2: Capital allowances no longer available
Under FHL, owners could claim capital allowances on furniture, fixtures, fittings, kitchens, bathrooms and integral features. This was often worth 15% to 25% of the purchase price on a well-advised case, materially reducing the first-year tax bill. From 6 April 2025, capital allowances are no longer available on residential holiday lets. The replacement-of-domestic-items relief applies instead, which is a far narrower relief for replacement furniture only.
Change 3: No longer pensionable earnings
FHL income was classed as relevant earnings for pension contribution purposes, allowing owners to make pension contributions up to the full rental income figure. From April 2025, holiday let income is investment income and no longer pensionable. Retired owners who used holiday let income to fund SIPP contributions have lost this route.
Change 4: Standard residential CGT on disposal
FHL property qualified for Business Asset Disposal Relief (10% CGT rate up to a lifetime limit) and rollover relief on reinvestment. These reliefs are no longer available on residential holiday lets from April 2025. CGT on disposal is now at the standard residential rates of 18% for basic rate taxpayers and 24% for higher rate taxpayers.
The practical effect for personal-name holiday let owners is that the structure is now less favourable than it was, and limited company ownership has become more attractive for higher rate taxpayers. Companies retain full mortgage interest deductibility as a business expense. The interest relief difference alone typically tips the balance for geared holiday lets held by higher rate taxpayers.
Should I own a holiday let in personal name or limited company in 2026?
The right ownership structure for a holiday let in 2026 depends on the buyer's personal tax position, intended portfolio size, planned hold period and exit strategy. The decision sits with the accountant, with the mortgage strategy built around the outcome. Fox Davidson does not advise on the tax structure. We model the mortgage position under both routes so the accountant can see the numbers.
For basic rate taxpayers buying a single holiday let as a lifestyle and income asset, personal name ownership is typically still the simplest route. The Section 24 restriction does not affect basic rate taxpayers (the 20% basic rate credit matches the marginal rate), the ongoing admin is lighter, and disposal on retirement gives access to the standard residential CGT rates.
For higher and additional rate taxpayers buying a geared holiday let, limited company ownership is materially more attractive post-April 2025. Companies deduct mortgage interest in full, pay corporation tax (19% to 25% depending on profit) on the net, and retain profit for reinvestment. A £400,000 holiday let with £18,000 interest cost held by a 45% taxpayer in personal name pays additional tax of roughly £5,400 per year compared with the pre-April-2025 position. The same property held in a company avoids this entirely.
Holiday let lender pricing treats limited company and personal name borrowers close but not identically. Limited company holiday let rates typically sit 0.1% to 0.4% above personal name equivalents with the same lender, and the lender panel for limited company holiday let is narrower than for personal name. The historic rate gap has narrowed meaningfully over the past five years but has not fully closed, reflecting the smaller secondary market for SPV mortgages and the more specialist underwriting.
Run the numbers
Before you approach a lender, model the qualification position and the stamp duty cost so you know which route applies and the all-in price. Holiday let purchases attract the 5% additional dwellings surcharge alongside standard SDLT.
HNW Mortgage Qualification Calculator
the FCA high net worth definition test. £300,000 income or £3,000,000 net assets. Many holiday let portfolio investors qualify on the assets test which unlocks the private bank route.
Open CalculatorUK Stamp Duty Calculator
SDLT residential rates with 5% additional dwellings surcharge for England, LBTT with 8% Additional Dwelling Supplement for Scotland, LTT with higher rates surcharge for Wales.
Open CalculatorSpeak to a holiday let mortgage specialist
Contact Fox Davidson for specialist holiday let mortgage advice. We arrange holiday let finance from £250,000 to £250 million across England, Scotland and Wales including Scottish short-term let licensed properties and Welsh 252/182 cases.
Why a specialist holiday let broker matters
Holiday let is a specialist product with a narrow lender panel and location-specific criteria. The income assessment method applied by the chosen lender is the single biggest factor in how much you can borrow. Applying to the wrong lender typically costs four to six weeks and a valuation fee. According to UK Finance, specialist BTL lending including holiday let has accounted for a growing share of UK landlord lending since 2022, as the serious end of the market has restructured and the amateur end has withdrawn under Section 24 and FHL abolition pressure.
Indicative rates and lending metrics. Rates and criteria vary by lender, scheme type, location, ownership structure and borrower profile. The Financial Conduct Authority does not regulate some forms of buy-to-let mortgage. Speak to us for figures specific to your case.
Frequently Asked Questions
What deposit do I need for a holiday let mortgage?
The standard minimum deposit is 25% of purchase price, corresponding to 75% maximum LTV. A small number of specialist lenders will consider 80% LTV (20% deposit) on strong cases in established tourist locations. Properties in marginal short-let locations, converted barns or annexes, or Scottish properties in Edinburgh or Glasgow control zones typically require 30% to 35% deposit. First-time landlord applicants usually require 30% to 35% regardless of location.
How do lenders assess holiday let income?
Lenders use one of three methods: comparable AST rent at 145% ICR at 5.5% stress (most conservative, building society default), a written projection from an ARLA-qualified or RICS-registered letting agent with a weighted annual figure across 30 weeks, or actual booking history from platform host reports and bank statements (usually requiring two years of trading evidence). The method that applies depends on the lender, and it is the main driver of how much you can borrow.
Can I use a holiday let for personal stays?
Yes. Most holiday let lenders permit personal use of the property up to 60 to 90 days per year outside the main booking calendar. The lender requires the property to be marketed commercially and available for booking throughout the letting season, and to generate sufficient rental income to meet the ICR test. Personal use that reduces the property below the required availability threshold (particularly relevant in Wales under the 252/182 rule) can breach mortgage terms.
Do I need to be a UK resident to get a holiday let mortgage?
Most high street and building society holiday let lenders require UK residency. A smaller specialist panel (Hodge, Kensington and certain private banks) accepts non-UK resident applications, including UK citizens resident abroad and foreign nationals purchasing UK holiday lets. Rates and deposit requirements are higher on non-UK resident cases, typically 30% minimum deposit and rates 0.25% to 1.00% above resident equivalents.
Has the FHL tax regime really been abolished?
Yes. The Furnished Holiday Lettings tax regime was abolished from 6 April 2025. Holiday let income is now taxed on the same basis as standard residential rental income, with Section 24 interest restrictions applying to personal name owners, no capital allowances on furniture and fittings, no pensionable earnings status, and standard residential CGT rates on disposal. The practical effect has been a shift toward limited company ownership for new acquisitions by higher rate taxpayers.
Can I convert my holiday let back to a standard BTL?
Yes, but this is a mortgage transaction rather than an administrative switch. Most holiday let mortgage products do not permit AST letting mid-term, and conversion to standard BTL requires a remortgage onto a standard BTL product. The ICR calculation changes from the holiday let basis to the standard AST basis, which may affect borrowing capacity. Early repayment charges on the existing holiday let product apply unless the remortgage falls outside the fixed rate period.
Are holiday let mortgages regulated by the FCA?
Most holiday let mortgages are not regulated buy-to-let contracts, on the basis that the property is let commercially rather than lived in by the borrower. This is the same regulatory position as standard BTL. Holiday lets that are also used as a second home by the owner for more than 40% of the time may fall within consumer BTL regulation, which is a separate regulatory category.
Is limited company ownership better for holiday lets in 2026?
For higher and additional rate taxpayers with geared holiday lets, limited company ownership is typically more tax-efficient following FHL abolition. Companies retain full mortgage interest deductibility against corporation tax, while personal name owners are now restricted to a 20% basic rate credit under Section 24. The decision sits with the accountant and requires modelling of SDLT on incorporation (for transfers from personal name), corporation tax, dividend extraction, and the ongoing admin of company accounts.
Do Scottish holiday lets need a short-term let licence?
Yes. All Scottish short-term let operators have required a licence from the local authority since 1 October 2023 under the Civic Government (Scotland) Act 1982 short-term lets licensing scheme. Edinburgh additionally requires planning permission for change of use to short-term letting in its control zone. Mortgage lenders require evidence of a valid licence or a licence application with local authority confirmation before issuing a holiday let offer on any Scottish property.
What is the Welsh 252/182 rule?
Welsh holiday lets must be available for letting for 252 days per year and actually let for at least 182 days per year to qualify for non-domestic business rates rather than second-home council tax. Properties that do not meet the threshold fall into the second-home council tax regime, which attracts a council tax premium of up to 200% depending on the local authority. Mortgage lenders typically require the property to meet the 252/182 rule on application.
How long does a holiday let mortgage take to arrange?
Six to ten weeks from first instruction to mortgage offer is typical on a well-prepared holiday let case, with conveyancing and completion adding a further three to six weeks. Cases involving Scottish short-term let licensing, Welsh 252/182 evidence, English Article 4 compliance, or unusual property types (converted barns, former commercial premises) take longer. Limited company applications add a further one to two weeks for company verification.
Why use Fox Davidson for a holiday let mortgage?
Holiday let is a specialist product with a narrow lender panel and location-specific criteria. We have been arranging holiday let mortgages since 2013, including the Scottish short-term let market from before the 2023 licensing scheme came in. We hold direct BDM relationships across the full holiday let lender panel, we structure the application pack to the chosen lender's income assessment method, and we handle Scottish, Welsh and English regulatory evidence natively.