The UK has been enjoying a real boom in staycation holidays so if your client is looking to generate an income from the holiday home of their dreams, whilst benefitting from regular getaways themselves, then here at Leek Building Society, we are happy to support you.
In addition to our standard Buy to Let criteria, the following criteria applies to Holiday Lets:
We assess Holiday Let affordability using an average of the high, mid and low expected seasonal rental income. A reputable holiday letting agency must provide confirmation in writing.
• The letting agent should confirm in writing a high, mid and low expected seasonal rate. We’ll then take an average of these seasons over a 30 week period to calculate the annual rental income.
• Agent’s letting fees should be deducted (or assumed as being 20% of gross rents if not available or confirmed).
• The net annual rental income must provide a minimum of 140% rental coverage based on the rate of 7.50%. For like-for-like remortgages the net annual rental income must provide a minimum of 125% rental coverage based on the rate of 6.50%
• For Existing Holiday Let: Either existing trading figures in the form of certified accounts, a letter from the holiday letting agent confirming gross annual income for last 2 years, or SA100 tax document can be used.
|
Weekly Rental Income |
30 Weeks Occupancy |
Total |
|
|
High Season |
£1,200 |
X 30 |
£27,000 |
|
Mid Season |
£900 |
||
|
Low Season |
£600 |
||
|
Average |
£900 |
||
|
Deduct 20% letting agent fees |
£27,000 x 20% |
£5,400 |
|
|
Net annual rental income |
£21,600 |
||
|
Must be equal to or greater than mortgage balance x 7.5% at an ICR of 140%. |
|
Mortgage balance x |
Pay rate |
x Stress rate |
£15,750 |
|
£150,000 |
7.5% |
140% |
A Holiday Let mortgage is for a client who is looking to borrow money on a property that will be let out to the tenants on a short term basis for holidays, usually for no more than two or three weeks at a time.
It differs from a Holiday Home mortgage, where you borrow money to buy a second home that only you will use. Please refer to our residential lending criteria.
We allow borrowers to occupy the property themselves for up to 90 days a year.
We assess Holiday Let affordability using an average of the high, mid and low expected seasonal rental income. A reputable holiday letting agency must provide confirmation in writing. We’ll then take an average of these seasons over a 30 week period to calculate the annual rental income. Agent’s letting fees should be deducted (or assumed as being 20% of gross rents if not available or confirmed). The net annual rental income must provide a minimum of 140% rental coverage based on 7.50%. For like-for-like remortgages the net annual rental income must provide a minimum of 125% rental coverage based on 6.50%.
Whilst we make our assessment based on the rental cover please note we have a minimum personal annual income of £20,000 which can be single or joint.
For Existing Holiday Let: Either existing trading figures in the form of certified accounts, a letter from the holiday letting agent confirming gross annual income for last 2 years, or SA100 tax document can be used.
Our Holiday Home mortgages are currently only for applicants who currently owned their residential homes. We do welcome applications from First Time Landlords though.
No. Long-term tenants fall under the category of the Buy to Let mortgage as tenants will be using the property as their main residence rather than a short term holiday.
