Seeking brokers who have seen BTL landlords sell or convert to holiday let because of regulations

Journalist: Shekina Tuahene, Mortgage Solutions

ended 25. March 2022

I am looking for brokers who have come across buy-to-let clients who want to sell off properties or transition to a holiday let mortgage either because they believe the yields are higher or they feel there are fewer regulations. This is for a feature with Mortgage Solutions on how buy to let investors may be rethinking their investments and moving into more complex areas of the market for higher returns. I ideally want short responses of no longer than 200 words and I'm happy to take a phone call if preferred.

5 responses from the Newspage community

Star Quote
"We have a number of professional landlord clients who are looking to shift the balance of their property portfolios. Mostly we’re seeing them selling what they determine their "weaker" buy-to-let properties and are looking to reinvest those funds into holiday lets, where the same regulations don't necessarily apply yet. It seems a balance in property investment type is becoming increasingly desirable. This move even extends down to the casual landlord who maybe just has one buy-to-let. The combination of feeling forced out the market due to regulation, plus a better understanding of the holiday let opportunity, where they can use the property themselves too, has really meant landlords we're speaking to are considering their positions carefully. Interestingly, we're seeing a growing demand for holiday let/buy-to-let hybrid mortgages, where the property can be tenanted in the winter and let out to holiday makers in the summer. There's real opportunity for creative product development in this area."
Star Quote
"The pandemic has provided UK holiday let owners with a massive boost as potential sunseekers have been forced to spend their money on home shores. Many people have realised the increased demand, high yields and potential flexibility of owning a holiday let. The option to also use this as a personal staycation spot also has appeal. We have also seen investors diversify into other complex property areas in order to increase returns. HMO purchases and conversions have increased as have multi-unit freehold properties. These types of investments do bring their own complexities and risks, and it's important potential investors go in having done solid research and with an awareness of what is required."
Star Quote
"The staycation boom has really challenged your average property investor's typical thinking with holiday lets becoming increasingly popular. Whilst those with just a few buy to lets seem wary of the uncertain return and irregular income a holiday let offers compared to a traditional long-term let, we have seen many with larger portfolios start to diversify into short term lets as they chase the much higher returns on offer. With the multiple tax advantages available on holiday lets, very relaxed mortgage underwriting criteria, plus the added benefit of being able to use the property for personal use between 1-3 months per year (dependent on the lender), the market will only increase as more and more people realise the huge benefits and returns these types of investments offer."
Star Quote
"Since the pandemic hit, we’ve seen a rise in holiday let mortgages for all us Brits in thrall to the staycation. It makes for a viable investment if you can find the right property at the right price in the right place. Now with sites such as Airbnb taking care of much of the booking and admin headache, we’ve seen landlords turn their eyes towards the coast. In actual fact in may turn out to be a real winner because given the rises in costs of living it’s likely a lot of people won’t be able to afford to get to the beaches of the EU so there’s likely higher demand for breaks in good old Blighty."
"There have certainly been more enquiries about holiday lets than in previous years, but most of these are driven simply by people seeing an opportunity rather than from any particular search for yield; the news for the past two years has been full of stories about staycations and UK holiday lets have been fully booked. Essentially, it sounds like a great opportunity to many, with the added bonus of you being able to grab a weekend away for free if its vacant. The other driver is accountants, because when all the rules around income tax calculations on rental properties came into force and reduced the net earning for many landlords, certain types of holiday let property were excluded. So you can get a tax advantage in a holiday let over a normal buy-to-let property."