Leeds Building Society has launched a new dedicated range of holiday let products.
The mutual says it made the move to support demand in the UK, which has increased significantly over the last five years.
Between 2008 and 2011, the use of UK holiday cottages doubled and it continues to rise. According to Travelodge, two thirds of Britons will take a summer break in the UK this year, which is a increase of 41% compared to 2012.
Kim Rebecchi, sales and marketing director at Leeds Building Society, said: “Holiday let provides an appealing alternative to buy-to-let, with attractive rental returns and a second home rolled in to one.
“We estimate that up to two thirds of existing holiday let landlords would refinance their current deal in order to reduce their costs and maximise their income, but choice is limited. I am delighted that we are able to support the UK holiday market by launching a dedicated product range and remove the uncertainty for new and existing holiday let landlords.”
The Leeds said that careful selection of holiday homes can generate attractive financial returns with consistent rental demand throughout the year. For example, a two bedroom holiday cottage in Keswick let for 39 out of 52 weeks per year can attract rent of around £350 per week, rising to £650 in peak periods. Assuming an average rent of £400 per week, around £15,000 annual rental income is generated, significantly greater than a comparable two-bedroom residential buy-to-let property.
Rebecchi said: “According to the Holiday Lettings Insight Report, holiday rentals generated in excess of £540m income in 2011. However, we know that funding for prospective holiday home landlords remains scarce, with only a handful of regional lenders in the market.
“As a result, Leeds Building Society has introduced a dedicated range of holiday let mortgages, priced alongside our buy-to-let range, to offer greater access to this type of lending and we believe this will create more opportunity and capacity.
“Furthermore, our team of mortgage underwriters understand this market and we’ve made our most popular buy-to-let fixed rate products available, so holiday let landlords can secure a competitive deal over a timeframe that best suits their needs.”