Do not assume a residential or conventional buy-to-let mortgage permits holiday letting. Check the mortgage conditions, lease, planning position, licence requirements and insurance before committing to the purchase. Your property may be repossessed if you do not keep up repayments.
What is a holiday let mortgage?
It is finance for a property offered to guests for short stays rather than to one household on a conventional tenancy. Product labels and permitted uses differ. Some lenders distinguish a traditional managed holiday cottage from frequent platform-based short-term lets, while others limit how often the owner can stay at the property.
The correct mortgage is the one whose written conditions fit the actual use. A broker should present the proposed booking model, management arrangements and personal-use plans accurately, then confirm current product criteria before an application is submitted.
What lenders assess
| Area | Questions likely to matter |
|---|---|
| Applicant | Income, credit history, landlord or hospitality experience and available reserves. |
| Property | Location, construction, value, marketability, lease restrictions and whether it is suitable for year-round use. |
| Letting model | Expected stay length, booking channels, management plan, personal use and any seasonal closure. |
| Income | Independent rental evidence, comparable properties, seasonality, occupancy assumptions and sustainability. |
| Compliance | Planning, registration or licensing, fire and gas safety, insurance and any local restrictions. |
How rental income is tested
A peak weekly tariff multiplied by 52 is not a reliable borrowing figure. A lender may request a projection from an established letting agent or valuer and apply its own occupancy, expense and interest-rate assumptions. The method and required cover vary by lender, applicant, tax position and product.
Prepare a low, central and high revenue case. The low case should still cover the mortgage and essential running costs without depending on exceptional occupancy or peak-season pricing.
Costs to include in the business plan
Tax treatment changed in April 2025
The separate furnished holiday lettings tax regime was abolished from 1 April 2025 for Corporation Tax and from 6 April 2025 for Income Tax and Capital Gains Tax. Do not base a new purchase on the former FHL interest, capital allowance or capital-gains treatment.
Ownership in a personal name or company can produce different tax, mortgage and legal outcomes. A broker can explain product availability, but the ownership decision requires advice from a suitably qualified tax adviser and conveyancer.
Planning, licensing and safety
Requirements depend on the UK nation and local authority. In England, official guidance tells owners to check planning permission, business rates or council tax, fire safety, gas and electrical safety, EPC rules and suitable insurance. Local planning controls can apply.
Scotland has a mandatory short-term let licensing scheme. Rules in Wales and Northern Ireland differ, and local requirements can change. Use the property postcode to check the relevant council website and obtain written confirmation where the position is unclear.
A practical application checklist
- 1. Verify permitted use. Check planning, licence, title, lease and mortgage restrictions.
- 2. Build the forecast. Use evidence for nightly rates, seasonality, occupancy and every operating cost.
- 3. Set the ownership structure. Get tax and legal advice before applying or exchanging contracts.
- 4. Gather evidence. Prepare income documents, deposit evidence, rental projections and management details.
- 5. Compare current criteria. Ask the broker to confirm acceptable use, personal stays, property type and income calculation.
- 6. Keep a cash reserve. Allow for voids, repairs and revenue below the central forecast.
Related guidance
Discuss a holiday let mortgage
Tell us how the property will be used and we will try to match you with an FCA-authorised mortgage broker whose stated service area covers specialist buy-to-let cases.
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