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November 12, 2020
2 minute read
Despite lockdown 2.0, the holiday let market has remained robust. Some lenders and brokers have reported that mortgage enquiries for holiday properties has hit the roof.
While you might think a global pandemic and UK recession would see prospective landlords holding off, it seems that’s not the case.
The property market is in fact seeing a mini-boom, with an impressive return to pre-coronavirus levels of activity in September just four months after re-opening began in England. Data from HM Revenue and Customs shows that 98,010 property sales went through in September, up 21% on August’s figures and down only 0.7% on last September.
The wider housing market boom is put down to home movers looking to up-size to larger properties, with more space and gardens. And for those that can afford it, the appeal of a second home outside the cities is obvious.
Foreign travel restrictions have also fuelled the demand for UK seaside and rural destinations. During the holiday periods, hotels booked up or were operating at limited capacity which increased demand for self-catering accommodation. This has piqued investor interest in holiday let properties.
A time-limited stamp duty holiday has also forced the hand of potential buyers. Although holiday let investors will continue to pay a 3% stamp duty surcharge on purchases, they will pay no further tax on the first £500,00 of the property’s value if they complete before end March 2021.
That means a holiday let investor buying a £500,000 property now would halve their stamp duty bill from £30,000 to £15,000.
Brokers also suspect a lack of 90% mortgages and a drying-up of first time buyer activity in the market has led to prospective landlords filling the void.
Mortgage options also look good. Moneyfacts data reveals that the number of holiday let mortgage products on the market increased from 74 in mid-August to 114 at the end of September.
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