Last reviewed: June 2026
TL;DR- Holiday let mortgages are specialist products for properties let to short-term guests - standard buy-to-let mortgages typically prohibit short-term letting.
- Lenders assess affordability on projected holiday rental income, which is seasonal and less predictable than long-term rental income.
- Furnished holiday let (FHL) tax status previously provided significant tax advantages but was abolished from April 2025 under changes announced in the 2024 Autumn Budget.
- Stamp duty additional property surcharges apply to holiday let purchases in the same way as other additional residential properties.
What Is a Holiday Let Mortgage?
A holiday let mortgage is a specialist mortgage product for properties that are let to short-term guests on a commercial basis - typically through platforms such as Airbnb or direct bookings, or via holiday letting agents. Standard residential and buy-to-let mortgage terms typically prohibit short-term or holiday letting, so a specific holiday let mortgage product is required.
The holiday let market in the UK is concentrated in areas with strong tourism appeal: coastal areas, the Lake District, the Cotswolds, rural Scotland and Wales, and popular city centre locations. Lender availability varies by geography, with some specialist lenders focusing on specific regions.
How Lenders Assess Holiday Let Applications
Holiday let mortgage lenders assess affordability based on projected annual rental income from holiday letting. Because holiday rental income is inherently seasonal and variable, lenders typically apply conservative assumptions:
- Projected income is based on achievable weekly rental rates multiplied by an assumed occupancy level - often 30 weeks per year or a percentage of peak, mid and low season rates.
- Many lenders use a local holiday letting agent's projected income figures to assess achievable rents rather than relying solely on the applicant's own projections.
- Income coverage requirements are typically higher than standard BTL - often 130-145% of the mortgage payment at a stressed rate.
- Personal income requirements are common, as lenders want assurance that the borrower can service the mortgage during low-occupancy periods.
Furnished Holiday Let Tax Status: Changes from April 2025
Furnished holiday let (FHL) status was a HMRC tax classification that provided significant tax advantages to qualifying short-term let properties, including: full mortgage interest deductibility (not subject to Section 24 restriction); capital allowances on furniture and equipment; business asset disposal relief on sale; and eligibility for pension contribution relief based on FHL profits.
The FHL regime was abolished from 6 April 2025, as announced in the 2024 Autumn Budget. From that date, income from furnished holiday lettings is treated as ordinary property income, subject to the same rules as standard residential lettings - including the Section 24 mortgage interest restriction for individual landlords. The implications of this change for existing FHL property owners and for the viability of new holiday let investments are significant. Specialist tax advice is required before making investment decisions in this area.
Stamp Duty on Holiday Let Purchases
Holiday let properties are treated as additional residential properties for stamp duty land tax purposes in England and Northern Ireland, attracting the additional dwelling surcharge on top of standard SDLT rates. Equivalent surcharges apply in Scotland (LBTT) and Wales (LTT). The applicable rates and thresholds are published by HMRC and the respective devolved tax authorities.
Planning Permission and Local Restrictions
Some local planning authorities have introduced or are considering restrictions on short-term holiday letting, particularly in areas where the prevalence of holiday lets has contributed to housing affordability pressures for local residents. In some areas, planning permission is required to change a property's use to short-term holiday letting. Prospective purchasers should check the planning position in the specific local authority area before proceeding. Wales introduced a licensing scheme for holiday let operators from 2023.
Frequently Asked Questions
Can I use a standard buy-to-let mortgage for a holiday let property?
No. Standard buy-to-let mortgage terms typically prohibit short-term letting of less than six months. Using a standard BTL mortgage for holiday letting is a breach of the mortgage conditions and could result in the lender demanding immediate repayment. A specific holiday let mortgage product is required for properties intended for short-term letting.
What happened to furnished holiday let tax relief?
The FHL regime, which provided tax advantages including full mortgage interest deductibility and capital allowances, was abolished from 6 April 2025. Income from short-term holiday lettings is now treated as ordinary property income under standard income tax rules, including the Section 24 mortgage interest restriction for individual landlords. Existing FHL property owners should seek specialist tax advice on the implications for their specific position.
Can I use a holiday let property for personal use?
Most holiday let mortgage products permit personal use of the property by the owner for a defined number of weeks per year, typically 4-8 weeks. Personal use weeks reduce the available letting weeks and therefore the achievable rental income. The previous HMRC FHL qualifying conditions also set limits on personal use - with the abolition of the FHL regime from April 2025, the tax implications of personal use should be reassessed with a specialist adviser.
Are holiday let mortgages regulated by the FCA?
Standard investment holiday let mortgages are not regulated by the FCA in the same way as residential mortgages. Consumer credit rules and general FCA conduct expectations apply, but the detailed MCOB mortgage conduct rules that govern residential and consumer buy-to-let mortgages do not apply to standard investment holiday let products.
