Holiday Let Mortgage UK 2026
What Is a Holiday Let Mortgage?
A holiday let mortgage is a specialist buy-to-let product designed for properties rented out on a short-term basis to paying guests rather than let to a single household on a 6 or 12 month tenancy. The guest base is usually tourists, business travellers, weekenders, or contractors. The letting pattern is multiple stays across the year, often booked through Airbnb, Booking.com, Sykes Cottages, Vrbo, or a direct booking site.
Standard residential mortgages prohibit short-term letting. Standard buy-to-let mortgages prohibit it too, or restrict it to long-term assured shorthold tenancies. Letting a property on Airbnb under the wrong mortgage is a breach of contract and a common reason lenders call in loans. A holiday let mortgage is the correct product if the property will be let for weeks at a time to changing occupants.
Knox Mortgages is whole of market. We place holiday let cases with the specialist building societies and private lenders who actually underwrite this risk, structure limited company applications where the tax position demands it, and handle the criteria friction that most bank mortgage advisers cannot.
Holiday Let vs Short-Term Let vs Airbnb vs Serviced Accommodation
These terms get used interchangeably in the property press. Lenders treat them as different products. Getting the definition right is the difference between a smooth application and a declined case.
| Term | What it means | Typical letting pattern | Regulatory status |
|---|---|---|---|
| Holiday let | Property let to holidaymakers on short stays, usually furnished | 3 to 14 night stays, seasonal peaks | Residential C3 planning in most cases |
| Furnished Holiday Let (FHL) | Former HMRC tax category (abolished 6 April 2025) | Same as holiday let | No longer a distinct tax regime |
| Short-term let | Any property let for less than 6 months at a time | 1 night to several weeks | Same as holiday let in most areas |
| Airbnb | Specific booking platform, not a property type | Varies, often 1 to 7 nights | Same as short-term let |
| Serviced accommodation (SA) | Short-term let with hotel-style services (cleaning, linen, check-in) | 1 to 30 nights, often corporate or leisure | Sometimes classed C1 (hotel) if services are substantial |
| Holiday home | Second home used personally, occasionally let | Minimal or no letting | Second home, not a let property |
| Second home rental | Owner-occupied part-time, let the rest of the year | Mixed personal use and paid stays | Usually treated as holiday let |
The practical point: a property listed on Airbnb is a short-term let. A short-term let used for holidays is a holiday let. Serviced accommodation adds a service layer on top. Lenders price and underwrite each slightly differently, and some will only accept one or two of the categories.
Why Holiday Let Mortgages Are Different from Standard Buy-to-Let
A standard buy-to-let mortgage assumes a single tenant on an assured shorthold tenancy paying a consistent monthly rent. The lender underwrites against that certainty. A holiday let is the opposite: variable income, multiple occupants per year, seasonal voids, booking platform fees, cleaning costs, and no tenancy agreement protecting the lender’s position.
Specific differences:
- Higher deposit. Typically 25 to 30% minimum, often 35% for serviced accommodation or Airbnb-heavy profiles.
- Higher rates. Holiday let rates typically sit 0.5 to 1.5% above equivalent buy-to-let rates for the same loan-to-value.
- Different rental cover calculation. Lenders use a weighted blend of low, mid and high season weekly rates rather than a single monthly figure.
- Fewer lenders. Around 30 UK lenders offer buy-to-let. Fewer than 15 have genuine holiday let criteria, and only a handful accept serviced accommodation or Airbnb without restriction.
- Property type scrutiny. Converted barns, lodges, cabins, properties on holiday parks, and leaseholds with short-term letting restrictions are all common decline reasons.
- Minimum income requirement. Most holiday let lenders want to see £20,000 to £40,000 of external income, meaning the case does not rely purely on the holiday let rent.
This is why pricing a holiday let mortgage from a comparison website is rarely accurate. The headline rate on a generic buy-to-let product does not apply. You need a lender who underwrites holiday let specifically.
The FHL Regime Was Abolished on 6 April 2025
This is the single biggest change in holiday let tax treatment in decades, and most existing online content is still wrong about it. Knox addresses this directly because clients make poor investment decisions based on outdated guides.
Before 6 April 2025, a Furnished Holiday Let qualified for a set of preferential tax treatments that made holiday lets materially more tax-efficient than standard buy-to-let property. From 6 April 2025, that regime was abolished. Holiday lets are now taxed under the standard property income rules that apply to long-term rentals. The changes:
- Capital allowances are gone. Before April 2025, FHL owners could claim capital allowances on furniture, fixtures, kitchens, and fit-out costs, and deduct them against rental profit. That deduction no longer applies. Replacement of Domestic Items Relief replaces it, which is more restrictive.
- Mortgage interest relief is now restricted to basic rate. Before April 2025, FHL owners could deduct full mortgage interest against rental profit at their marginal rate (20%, 40% or 45%). From April 2025, the restriction that already applied to standard buy-to-let applies: mortgage interest is replaced with a 20% tax credit only. Higher-rate and additional-rate taxpayers are materially worse off.
- CGT rollover relief is gone. FHLs previously qualified for Business Asset Rollover Relief and Business Asset Disposal Relief (10% CGT rate). Both are removed. Gains on sale are now taxed at standard property CGT rates (18% basic, 24% higher).
- No longer pension-relevant earnings. FHL income used to count as relevant UK earnings for personal pension contribution purposes. It no longer does.
- Losses can no longer be set against other FHL business profits in the same way.
The commercial reality: holiday lets still make sense as investments in the right locations, and short-term yields can still outperform long-term buy-to-let. But the tax tailwind has gone. Cashflow matters more now than it did in 2024. Speak to an accountant about your specific position. HMRC generally treats post-2025 holiday let income under the standard property business rules, and most clients will see a higher effective tax rate than they did pre-reform.
Knox flags this to every holiday let client because the 2025 change is still missing from a large amount of broker and letting agent marketing.
Lender Criteria for Holiday Let Mortgages
Criteria vary by lender but the core requirements look like this:
| Criterion | Typical range | Notes |
|---|---|---|
| Deposit | 25% to 35% | 25% for clean cases, 30 to 35% for SA, Airbnb, or first-time landlords |
| Minimum external income | £20,000 to £40,000 | Some lenders will drop this for experienced landlords |
| Rental cover (ICR) | 145% to 150% | Calculated against a notional stressed rate |
| Notional stress rate | 5.5% to 6.5% | Higher on 2 year fixes, lower on 5 year fixes |
| Minimum property value | £75,000 to £100,000 | Rural and holiday-park properties often excluded |
| Minimum borrower age | 21 to 25 | Term usually needs to end before age 75 or 85 |
| Credit history | Clean or near-clean | Adverse credit accepted only by specialist lenders |
| Experience | Often not required | Some lenders want existing BTL ownership |
| Property type | Standard construction preferred | Non-standard construction and timber-frame caveats apply |
Rental cover is where most applications wobble. A lender will take the property’s projected weekly income across low, mid and high season, weight it by expected occupancy (often 30 to 35 weeks per year), then test that the resulting annual rent covers 145 to 150% of the mortgage interest calculated at the stressed rate. If the property is in a genuine tourist postcode, the numbers usually work. If it is in a weaker location, the loan size will be capped.
For comparison, the standard buy-to-let stress test sits around 125% for basic-rate taxpayers and 145% for higher-rate taxpayers at a similar notional rate. Holiday lets are underwritten more tightly because the income is less predictable.
Specialist Holiday Let Lenders
Knox uses a panel of specialist building societies and private lenders for holiday let cases. The table below captures the active players and what each one accepts as of 2026. Criteria shift frequently, so the live position always needs checking against the lender at point of application.
| Lender | Pure holiday let | Airbnb | Serviced accommodation | Limited company | Notes |
|---|---|---|---|---|---|
| Cumberland Building Society | Yes | Yes, with caveats | Case by case | No | Strong in the Lake District and Scottish Borders. Well-known specialist. |
| Leeds Building Society | Yes | Yes | No | No | Personal name only. Good rates, strict criteria. |
| Principality Building Society | Yes | Yes | Case by case | No | Strong in Wales and the West Country. |
| Bath Building Society | Yes | Yes | Case by case | No | Flexible on rural properties. Slower service. |
| Furness Building Society | Yes | Yes | Yes | Yes | Broad appetite. Lake District specialist. |
| Cambridge & Counties Bank | Yes | Yes | Yes | Yes | Commercial lender. Higher rates, flexible criteria. |
| Tipton & Coseley | Yes | Yes | No | Limited | Good on small regional cases. |
| Together | Yes | Yes | Yes | Yes | Specialist lender. Higher rates, accepts complex cases. |
| Hodge | Yes | Yes | Yes | Yes | Strong in later-life holiday let cases. |
| Paragon | Yes | Case by case | Case by case | Yes | Portfolio landlord focus. |
| Harpenden Building Society | Yes | Case by case | Case by case | Case by case | Niche and flexible. |
| Precise Mortgages | Yes | Yes | Case by case | Yes | Specialist distribution. |
Pure FHL-style products still exist, but the underwriting conversation has shifted post April 2025. Lenders increasingly treat holiday let as a short-term let product first and ask about Airbnb and SA use upfront. Do not disclose vaguely. Tell your broker exactly how the property will be let.
Rental Income Calculations and Seasonality
A standard buy-to-let lender asks for a single monthly market rent figure, confirmed by a lettings agent or valuer. A holiday let lender wants three numbers:
- Low season weekly rate
- Mid season weekly rate
- High season weekly rate
They then blend these against an occupancy assumption, usually 30 to 35 weeks per year. Some lenders accept the valuer’s projected gross annual income figure directly. Others require three comparables from the local area or a letter from a holiday letting agent (Sykes, Hoseasons, local independents).
Worked example. A 3 bed cottage in North Cornwall:
| Season | Weekly rate | Weeks | Income |
|---|---|---|---|
| High (school holidays and summer) | £1,800 | 14 | £25,200 |
| Mid (spring, autumn, half term) | £1,100 | 12 | £13,200 |
| Low (winter excluding Christmas) | £550 | 8 | £4,400 |
| Total gross annual income | 34 | £42,800 |
That £42,800 figure is what the lender stress tests. Against a £300,000 mortgage at a 6% notional stress rate, the annual interest stress is £18,000. At 145% ICR, the required income is £26,100. The cottage clears comfortably.
The same £300,000 mortgage let to a long-term tenant at £1,400 a month would generate £16,800 annually. The short-term let yield is materially higher before costs. After cleaning, platform fees, management, utilities, insurance, and voids, the gap narrows significantly. Holiday lets are gross-yield attractive and net-margin tighter than most owners expect. Budget properly before you buy.
Seasonality is the biggest hidden risk. A property in a genuine year-round tourist location (Lake District, Cornwall, Edinburgh, Bath) performs differently from one in a summer-only coastal resort. Lenders increasingly want to see evidence of shoulder-season demand rather than a big summer and empty rest of the year.
Indicative Holiday Let Mortgage Rates 2026
Rates move weekly. The table below is indicative of the 2026 holiday let market at typical deposit levels. Always check live rates at point of application.
| Product | Typical deposit | 2 year fix | 5 year fix |
|---|---|---|---|
| Personal name holiday let, 75% LTV | 25% | 5.8% to 6.4% | 5.5% to 6.1% |
| Personal name holiday let, 70% LTV | 30% | 5.6% to 6.2% | 5.3% to 5.9% |
| Limited company holiday let, 75% LTV | 25% | 6.1% to 6.7% | 5.8% to 6.4% |
| Limited company holiday let, 70% LTV | 30% | 5.9% to 6.5% | 5.6% to 6.2% |
| Serviced accommodation, 70% LTV | 30% | 6.4% to 6.9% | 6.1% to 6.6% |
| Airbnb-heavy use, 65% LTV | 35% | 6.5% to 7.0% | 6.2% to 6.7% |
Arrangement fees typically sit at 1.5% to 2.5% of the loan. Some lenders offer lower-rate products with higher fees or higher-rate products with lower fees. The right blend depends on loan size and intended hold period. Knox models fee-adjusted true cost on every case rather than picking the headline rate.
Holiday Let in a Limited Company
This is one of the areas where Knox’s limited-company buy-to-let expertise matters most. Running a holiday let through a limited company (typically a Special Purpose Vehicle, SIC code 68209 or 55201) has been a common structure for higher-rate taxpayers since the 2017 to 2020 Section 24 mortgage interest restriction.
After the 6 April 2025 FHL abolition, the tax calculus shifted again. The personal name holiday let now suffers the same 20% interest tax credit restriction that personal name buy-to-let has suffered since 2020. For higher-rate taxpayers buying new holiday let stock, the limited company structure is often more efficient, because:
- Mortgage interest is fully deductible against company profits before tax.
- Corporation tax is 19 to 25% rather than 40 to 45% marginal income tax.
- Profits can be retained, reinvested, or extracted flexibly through dividends and pension contributions.
- The property sits inside an entity that can be restructured, gifted, or sold separately from personal assets.
Trade-offs include higher mortgage rates (typically 20 to 40 bps higher than personal name), an annual accountant cost, and double taxation on extraction if you take all profit as dividends.
For a detailed breakdown of SPV structuring, director’s personal guarantees, and the lender panel that accepts limited company holiday lets, see our limited company buy-to-let mortgage page. The principles overlap almost entirely. Speak to an accountant before picking a structure. The answer depends on your marginal rate, other property income, and exit plans.
Airbnb-Specific Lender Attitudes
Airbnb changed the short-term let market. It also changed how lenders underwrite. Early Airbnb-heavy cases (2015 to 2019) were often declined outright. By 2026, most holiday let lenders accept Airbnb use, but with three common caveats:
- Must not be the only income channel. Lenders prefer a multi-platform or direct-booking profile rather than sole Airbnb reliance.
- Property cannot be a primary residence let part-time. Renting out your own home on Airbnb while living there is a separate conversation and usually needs a consent-to-let or a rental profile arrangement rather than a holiday let mortgage.
- Property must comply with local planning. Some London boroughs, Edinburgh, and Scottish short-term let control areas require a licence or planning change of use.
A handful of lenders still decline pure Airbnb profiles. Most will accept them on holiday let criteria. The underwriting question is always: is this a genuine holiday let, marketed through Airbnb among other channels, or a different business model dressed up as a holiday let?
Knox matches the lender to the profile. That is the value of whole-of-market versus tied broking.
Serviced Accommodation Considerations
Serviced accommodation (SA) sits at the edge of residential and commercial property finance. An SA property provides hotel-style services: cleaning between every stay, fresh linen, sometimes welcome packs or concierge. The typical guest is a business traveller, relocating worker, or leisure guest on a 1 to 30 night stay.
Lender implications:
- Some SA properties end up classed as C1 (hotel) rather than C3 (residential dwelling) for planning purposes, especially where local authorities have tightened enforcement. C1 cases need commercial finance, not a residential holiday let mortgage.
- Article 4 Directions in parts of London, Edinburgh, Bath, York and Cornwall restrict change of use from residential to short-term let without planning permission.
- Some leasehold flats prohibit short-term letting via the lease. Lenders check the lease clauses before issuing offers.
- Business rates may apply instead of council tax if the property is let for more than 140 days per year in England. Small Business Rate Relief often brings the bill to zero, but the property is no longer council-tax assessed.
SA is viable, and Knox places these cases regularly. It needs a specialist lender, a clean planning position, and a lease (if leasehold) that permits short-term letting. Cambridge & Counties, Together, Furness BS and Hodge are the main panel.
Tax Treatment After FHL Abolition
Standard property income rules now apply. HMRC generally treats post-6-April-2025 holiday let income under the same framework as long-term buy-to-let income, with these practical consequences for most owners:
- Rental profit is taxed at your marginal income tax rate (20%, 40%, 45% for personal owners; 19 to 25% corporation tax for limited companies).
- Mortgage interest is replaced by a 20% tax credit for personal owners, not a full marginal-rate deduction.
- Capital allowances on furniture and equipment are replaced by Replacement of Domestic Items Relief, which is narrower.
- Capital gains on sale are taxed at 18% (basic rate) or 24% (higher rate) for residential property after the April 2024 reform.
- Inheritance tax treatment is standard: the property is part of your estate, no business property relief applies.
Transitional rules apply to accounting periods straddling 6 April 2025 and for unused capital allowance pools. The specific treatment of unused capital allowances, existing loss balances, and business asset disposal relief in the tax year of abolition needs accountant input. Do not rely on generic online guides. Speak to a property accountant who has specifically reviewed the 2024 Budget measures and subsequent Finance Act.
SDLT on Second Homes and Holiday Lets
Buying a holiday let means buying an additional property. Stamp Duty Land Tax (England and Northern Ireland) applies on top of the standard rates:
- Additional property surcharge: 3% on top of standard SDLT bands, paid on the whole price.
- Non-resident surcharge: A further 2% if you are non-UK resident at the time of purchase.
- Limited company purchase: The 3% surcharge applies from the first property. Companies do not get the single-property exemption that applies to individuals.
Worked example. A £400,000 holiday let bought by a UK resident individual who already owns a home:
| Band | Rate | SDLT |
|---|---|---|
| 0 to £125,000 | 0% plus 3% | £3,750 |
| £125,000 to £250,000 | 2% plus 3% | £6,250 |
| £250,000 to £400,000 | 5% plus 3% | £12,000 |
| Total SDLT | £22,000 |
Scotland (LBTT) and Wales (LTT) have their own equivalents with different thresholds and Additional Dwelling Supplement rates. Budget SDLT properly before purchase. A £400,000 holiday let in England costs £22,000 to stamp, not the £7,500 a first-home buyer would pay.
How Knox Places Holiday Let Cases
Knox’s process on a holiday let case:
- Scoping call. Understand the property, intended letting pattern (pure holiday let, Airbnb, SA, mixed), ownership structure (personal name or limited company), and existing portfolio.
- Deposit and income sense-check. Confirm the deposit source, external income, and any existing rental exposure.
- Lender shortlist. Pick 2 to 4 lenders whose criteria fit the profile, not a blanket quote on everyone.
- Projected rental income. Obtain holiday letting agent projections or local comparables to feed into the stress test.
- Application and underwriting. Submit to the best-fit lender. Manage the valuation, planning and lease queries as they arise.
- Offer, exchange, completion. Standard conveyancing once the offer is issued.
Knox handles holiday let cases inside personal name, limited company, or SPV. We cross-link the relevant specialism:
- Buy-to-let for the broader investment-property framework.
- Limited company buy-to-let mortgage for SPV-based holiday lets.
- Expat holiday let for UK nationals living abroad who want to buy a holiday let in the UK.
- Expat buy-to-let mortgage for expats on the wider investment-property side.
If your case is expat, limited company, and Airbnb-heavy at the same time, you need a broker who places all three. That is Knox’s core file profile.
Frequently Asked Questions
Can I live in my holiday let?
Only for limited periods. Most holiday let mortgages restrict personal occupation to around 30 to 90 days per year, depending on the lender. Full-time residence breaches the mortgage contract and is usually a ground for the lender to call in the loan. If you want to live in the property and let occasionally, you need a residential mortgage with consent-to-let arrangements, not a holiday let mortgage.
How many days can I let my holiday let?
Pre-April 2025, the FHL regime required at least 105 days of actual letting and 210 days of availability. Post-abolition, HMRC no longer uses those specific thresholds for tax purposes, but lenders often still refer to similar minimums in their criteria (typically 140 days actual let or available). England also applies a 140-day threshold for business rates eligibility. Check both the lender criteria and the local planning position.
Do I need planning permission for Airbnb?
Sometimes. In most of England, you can let a whole property on Airbnb as a C3 residential dwelling without a planning change of use if the letting is genuinely a holiday let. Some councils (including parts of London with a 90-day rule, most of Edinburgh, and Article 4 areas in Cornwall, Bath and York) require planning permission or a short-term let licence. Scotland’s short-term let licencing scheme applies nationally. Check the local authority position before you commit.
What deposit do I need for a holiday let mortgage?
Typically 25% minimum, with 30% the sweet spot for best rates. Serviced accommodation, Airbnb-heavy profiles, first-time landlords and non-standard properties can push the required deposit to 35%. Limited company purchases sit at similar levels but with slightly higher rates.
Can I get a holiday let mortgage as a first-time buyer?
Yes, but the lender pool is narrower. Cumberland, Furness, Principality and one or two specialists will accept first-time buyers with a strong income profile and a 30% plus deposit. Most mainstream holiday let lenders require existing buy-to-let or residential property ownership.
Is holiday let buy-to-let classed the same by lenders?
No. Standard buy-to-let products do not permit short-term letting. Letting a property on a standard BTL mortgage through Airbnb or Sykes is a breach of the mortgage contract. You need a dedicated holiday let product or an explicit short-term let permission from the lender.
What is the minimum income to get a holiday let mortgage?
Most lenders want to see £20,000 to £40,000 of external income (not counting the projected holiday let rent). A few lenders will drop the minimum for experienced landlords with strong portfolios. Self-employed applicants typically need 1 to 2 years of trading history.
How is holiday let rental income taxed now?
Under standard property income rules. Mortgage interest is replaced by a 20% basic-rate tax credit rather than a full marginal-rate deduction. Capital allowances no longer apply. Profits are taxed at your marginal income tax rate for personal owners, or corporation tax for limited companies. Speak to an accountant about your specific position.
Can I put a holiday let into a limited company?
Yes. Around 8 to 10 UK lenders accept holiday let purchases via a limited company SPV. Rates are typically 20 to 40 bps higher than personal name equivalents. The structure is often more tax-efficient for higher-rate taxpayers post 6 April 2025 but adds accountancy costs and a director personal guarantee. See our limited company buy-to-let page.
Can I remortgage my holiday let to release equity?
Yes. Remortgaging a holiday let to release capital (for another deposit, refurbishment, or business use) is standard. The new lender will re-stress the rent against current rates. A 2 year fix rolling off into a 6% plus remortgage environment often reduces the borrowing capacity, so some owners choose 5 year fixes for stability. Knox runs these conversations alongside every rate review.
Speak to Knox About Your Holiday Let
Knox Mortgages is whole of market and FCA-regulated. We place holiday let, short-term let, Airbnb and serviced accommodation cases across personal name, limited company and expat structures. No tied panels, no mainstream-only lender list, no generic advice.
Your home may be repossessed if you don’t keep up repayments on your mortgage.
Knox Mortgages is a trading style of Fort Advice Bureau which is regulated and authorised by the FCA to conduct Mortgage and Protection business, FRN: 972730
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