
With demand for holiday homes on the rise in the UK, Leeds Building Society has launched a new dedicated range of products to support growth.
With demand for holiday homes on the rise in the UK, Leeds Building Society has launched a new dedicated range of products to support growth.
More Britons now favour a break in a holiday cottage on home soil compared to a trip overseas, and the nationwide lender is hoping to capitalise on a potential gap in the market by offering wide a range of 'Holiday Let' mortgages.
The use of holiday homes in the UK doubled between 2008 and 2011, while recent research from Travelodge predicts that two thirds of Brits will take a summer break across the country this year - up 41% compared to 2012.
Holiday let properties therefore represent an "appealing alternative" to 'Buy to Let', according to Kim Rebecchi, Sales and Marketing Director at the Building Society.
"We estimate that up to two thirds of existing Holiday Let landlords would refinance their current deal in order to reduce their costs and maximise their income, but choice is limited," she said.
"I am delighted that we are able to support the UK holiday market by launching a dedicated product range and remove the uncertainty for new and existing holiday let landlords."
Rolling attractive rental returns and a second home into one investment can be extremely rewarding, with such properties generating an income in excess of £540 million in 2011.
A two bedroom holiday cottage in Keswick, for instance, let for 39 out of 52 weeks per year can attract rent of around £350 per week, rising to £650 in peak periods. Assuming an average rent of £400 per week, around £15,000 annual rental income is generated, significantly greater than a comparable 2 bedroom residential buy to let property.
Tom Shuttleworth from Strutt & Parker's Exeter office comments: "We've seen a marked increase generally, but especially in the summer months, in activity for those homes that have the potential to become holiday lets. Properties in prime holiday locations such as Salcome and Totnes in the South Hams are receiving the largest boost in viewings. Potential purchasers are now looking at properties to provide additional income, treating it as an investment, as well as a family home."
Leeds Building Society acknowledges that funding for prospective holiday home landlords remains scarce, with only a handful of regional lenders in the market, which is why it has come up with a new range of Holiday Let mortgages.
"Our team of mortgage underwriters understand this market and we've made our most popular buy to let fixed rate products available, so holiday let landlords can secure a competitive deal over a timeframe that best suits their needs," added Ms Rebecchi.
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