Why holiday lets need different mortgages
Standard BTL mortgages are typically for assured shorthold tenancies (long lets). Holiday lets are short-term, seasonal, and have variable income. Lenders price the risk differently:
- Income volatility - holiday lets earn 60-80% of annual income in 4-5 months. Lenders apply heavy stress tests.
- Furnishing and management - higher operating costs than standard BTL.
- Local restrictions - many UK areas now restrict short-term lets (Wales, Scotland, parts of London, parts of the South West). Lenders verify planning permission.
- FHL tax treatment - changed materially in April 2025; the tax advantages of qualifying as a Furnished Holiday Let were largely abolished. Confirm current treatment with your accountant.
Typical Ltd company holiday let mortgage terms
| Element | Typical range |
|---|---|
| Deposit | 25-40% (75-60% LTV) |
| Rate (5-yr fixed) | 6.0-7.5% (2025/26) |
| Arrangement fee | 1-2.5% of loan |
| Stress rate | 7-9% notional |
| Income assessment | 50-70% of projected gross peak income |
| Personal guarantee | Always required |
What you'll need to apply
- SPV or Ltd with appropriate SIC code (often 55209 Other holiday and other collection accommodation)
- Property details, location, and EPC
- Holiday let income projection from a recognised letting agent (Sykes, Cottages.com, etc.)
- Confirmation that local short-term-let restrictions allow holiday letting
- Deposit funds in the company
- Director income evidence (often less critical than the property's projected earnings)
Frequently asked questions
Are holiday lets still tax-advantaged in 2025/26?+
Less so than before. The Spring Budget 2024 announced the abolition of the Furnished Holiday Let tax regime from April 2025. From 2025/26, holiday lets are largely treated like other property businesses. Confirm current treatment with your accountant before purchase.
Can I do short-term lets in any property?+
Increasingly, no. Wales requires registration. Scotland requires licensing. London restricts to 90 nights/year per property without planning. Many South West, Lake District, and Cornish areas have restrictions. Always check local rules before exchange.
Can I buy via a trading Ltd or do I need an SPV?+
Both work, but most specialist holiday let lenders prefer a dedicated SPV. The pool of trading-Ltd-friendly holiday let lenders is smaller and rates often slightly higher.
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