November 11, 2021

Can I Use My Buy-to-Let Property for Holiday Lettings? 

It is assumed that to purchase a property with a buy-to-let mortgage opens the door to a wide variety of potential lettings opportunities, one of which is using a BTL home for holiday lettings with the aim of generating significant sums of money during high season.

UK Property Finance

There are important restrictions and caveats to take into account if planning on using a BTL property for any other purpose.

Consider the following example:

You decided some time ago to invest in a rental property to supplement your earnings through to retirement, you find the perfect property at a price you could afford, you’re accepted for a competitive Buy to Let mortgage and the purchase has gone ahead snag-free.

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Since then, you have been letting out your BTL home to reliable tenants and generating a secondary revenue stream. However, you have also picked up on the potential to generate even more money during certain high-demand times of the year; if your home was to be used for holiday lets.

Specialist mortgages for holiday lettings properties exist, but you also know they are much more expensive than buy-to-let mortgages, the tax incentives for furnished holiday lets are better than those that apply for BTL further increasing the appeal of changing your approach.

In which case, can you simply keep your buy-to-let property on its current mortgage and rent it out as a holiday let?

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The short answer unfortunately, is no.

Terms and Conditions on BTL Investments

With the overwhelming majority of lenders and mortgage brokers, buy-to-let mortgages are issued strictly and exclusively with conventional residential lettings in mind. It will most likely be specified in the terms and conditions of your mortgage that the property must be inhabited by the same tenant(s) as part of a tenancy agreement for the specified period of time.

This differs from holiday lettings, wherein the individuals occupying the property differ from one week or fortnight to the next.

“Using a buy-to-let mortgage for holiday letting without the express permission of the lender, constitutes a breach of mortgage conditions which can have serious consequences including forced redemption of the mortgage and damage to your credit rating” explained the experts at holidayletmortgages.co.uk.

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The only feasible option would be to switch to an appropriate facility with your current lender, or consider switching to a new lender. Though before doing so, it is important to factor in the additional costs of running a holiday let compared to those letting out a residential property in the conventional sense.

It is perfectly possible that the day-to-day costs of running your holiday let could augment the potential savings generated by way of better tax incentives.  You need to carefully consider the prospect of your holiday home sitting vacant during low-demand times of the year, or in the case of unforeseen eventualities like those of last year. Whether or not you decide to go ahead, it is advisable to consult with an independent broker to discuss the options available and ensure you find a competitive deal from an appropriate specialist mortgage broker such as UK Property Finance.

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