20 August 2021

Holiday lets for a staycation summer: the opportunity for brokers

A bumper summer for staycations is creating opportunities for holiday lets. As many as 85% of UK holidaymakers were planning to take a ‘staycation’ break this summer, according to a survey published in May by Travelodge.

Such is the demand for staycations that, according to news reports, some holiday let landlords expect to take a normal year's earnings in just a few months. 

As a result of this demand, holiday let owners have been able to charge more compared to previous years.  In some case, price rises have been huge. For example, consumer group Which? found a one-bedroom maisonette in Brighton that had increased its rates by 140%, from £53 per night in 2020 to £127 per night in 2021.

“With the decline in sterling and the impact of coronavirus on travel, people are choosing to staycation in Britain, creating huge demand and a real opportunity for holiday lets,” says Alan Browning, business development manager at Principality Intermediaries. 

The holiday let opportunity

The question now for brokers and their clients is whether this trend will continue, offering longer term opportunities beyond summer 2021.

Research suggests it might: software firm Square found the trend for staycationing could be set to continue to the end of 2022 and beyond. Its research showed that nearly half (45%) of UK holidaymakers plan to continue staycations until at least 2022 or until the pandemic is over, and 10% intend to go on holiday in the UK for at least the next three years.  

Not surprisingly, investors have sought to take advantage of the opportunity. Research from private and commercial banking firm Arbuthnot Latham earlier this year found that search demand for ‘holiday homes for sale’ had grown by 73% year-on-year. 

The recent boom in staycations isn’t the only reason for growing demand for holiday lets. They also offer several advantages.

Alan says: “The yields on holiday lets are greater than on student lets and HMOs. The tax position is more favourable than with buy to lets, arrears levels tend to be lower and they have larger loan sizes than BTL. It’s a fairly safe area to play in.”

“Many wealth advisers see this as an attractive opportunity for their high net worth clients,” he adds.

Alan says there’s been a big rise in enquiries for Principality holiday let mortgages. “During the height of the pandemic, we continued to offer holiday let mortgages”, Alan says, noting other lenders withdrew from the market. “We are seen as the market leader and we have been there from the very beginning,” he adds

Principality’s holiday let products are also popular as they offer a number of unique selling points, including allowing only one applicant to meet Holiday Let criteria. Also, the maximum mortgage is calculated by an estimate from a local holiday let agent, instead of being  determined by an AST or by the surveyor, as with most other lenders.

One of the other advantages of Principality products is that the owner of the holiday let can use the property for up to eight weeks each year. That way, alongside the financial rewards, they really can make the most of everything the property has to offer. 

Principality holiday let products have many more advantages and USPs. Email us at intermediary@principality.co.uk to find out more.

Published: 20/08/2021