A homeowner planning to let her flat on Airbnb discovered, before applying, that her lease prohibited short lets. Checking early meant the problem was fixed rather than declined.
The Client
Claire, 41, owned a two-bedroom leasehold flat in a coastal town in Kent, a short walk from the seafront. She had a residential mortgage with a high street lender on a fixed rate, with four months left to run.
Claire was moving in with her partner and wanted to keep the flat as an investment rather than sell it.
The Objective
Claire planned to let the flat on Airbnb during the summer and on other booking platforms the rest of the year. She contacted Drake to find out how to finance this properly and whether she would need a new mortgage.
The Complication
Before discussing lenders, Drake asked Claire to check three things: the location, her existing lender’s position, and the legal title to the property, including the lease.
Location was not a concern. The flat sat in a recognised seaside destination with strong holiday demand, which widened the choice of holiday let lenders.
Claire downloaded her title register from HM Land Registry. It showed no restrictive covenants limiting holiday use. Her lease told a different story. It contained a clause requiring the flat to be used only as a private residence and prohibiting any letting for periods of less than six months.
A clause like this would lead a holiday let lender to decline the application, with no route to appeal at application stage. Had Claire applied without checking, she would likely have paid valuation and arrangement fees for an application that could not succeed.
How We Assessed Options
Drake compared the two realistic routes side by side.
| Consent to Let (existing lender) | Holiday let remortgage | |
| Holiday letting permitted | No, consent offered for standard tenancies only | Yes, designed for holiday letting |
| Early Repayment Charges | None, existing mortgage stays in place | Payable if redeemed before the fixed rate ended in four months |
| Lease position | Short lets prohibited under the original lease | Short lets prohibited until the lease was varied |
| Income assessment | Not applicable | Based on projected holiday income, supported by a local agent forecast |
| Overall | Ruled out | Viable once the lease was varied and the fixed rate had ended |
Step 1: Consent to Let from the existing lender
Drake suggested Claire speak to her current lender first, as Consent to Let can be the most cost-effective option. Her lender confirmed it would only grant consent for standard assured shorthold tenancies, not holiday or short-term letting. This route was ruled out.
Step 2: Remortgaging straight away
A holiday let remortgage was the right type of product, but two things stood in the way. The lease restriction meant lenders would not proceed, and redeeming the mortgage early would trigger Early Repayment Charges on her fixed rate. Remortgaging immediately was ruled out.
Step 3: Resolving the lease first
The building had a share of freehold, with each flat owner holding a stake in the freehold company. This meant the lease could be changed by agreement. Claire’s solicitor approached the other leaseholders about a deed of variation permitting holiday letting, subject to sensible conditions on noise, refuse and notifying the managing agent.
Identifying the Right Route
Drake identified that the best route was to resolve the lease first and time the holiday let remortgage to complete as Claire’s fixed rate ended. This removed the lease barrier and avoided Early Repayment Charges entirely.
While the deed of variation progressed, Claire obtained a holiday letting income projection from a local letting agent, and Drake shortlisted lenders whose criteria suited the property, location and her circumstances.
The Outcome
The other leaseholders agreed the variation, and the deed was completed and registered at HM Land Registry in just under three months. Drake then submitted the holiday let mortgage application with the varied lease in place.
The lender assessed affordability on the projected holiday income, and the remortgage completed in the same week Claire’s fixed rate expired. She avoided Early Repayment Charges and wasted application fees, and the flat took its first bookings the following month.
Key lessons
- Check the title register and the lease before applying, not after
- Ask your existing lender about Consent to Let, and be clear it is for holiday letting
- Know when your fixed rate ends so the timing works in your favour
- A lease restriction is not always the end of the road, particularly with a share of freehold
This case study is an illustrative scenario based on the type of cases Drake Mortgages handles. Names and identifying details have been changed or anonymised. Every case is assessed on its own circumstances, and outcomes will vary.
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