Yes, it can often be done, but three checks decide whether it works: where the property is, what your current lender will allow, and what your deeds or lease say.
More and more homeowners are looking at Airbnb as a way to earn from a property they already own. If that property has a standard residential mortgage, you cannot simply start taking bookings. Getting the details right at the outset can save you unnecessary costs, delays and declined applications.
Here are the three points we look at first.
1. Location matters more than the platform
Holiday let lenders care far less about how a property is marketed than where it is.
Airbnb, Booking.com or a local agency makes little difference to them. What they want to know is whether people actually want to holiday there.
Properties in recognised visitor areas tend to have the widest choice of lenders:
- Coastal towns and seaside resorts
- Countryside and rural retreats
- National parks and Areas of Outstanding Natural Beauty
- Other established tourist destinations
Location affects two things:
- which lenders will consider the application at all
- how they assess the rental income
Most holiday let lenders base their calculation on projected holiday letting income, often supported by a letting agent’s forecast. In a strong tourist area that figure is easier to evidence. In a town or suburb with little holiday demand, the lender choice narrows considerably.
2. Ask your current lender for Consent to Let
Most residential mortgages do not allow you to let the property without your lender’s permission. Letting it out without consent can put you in breach of your mortgage terms.
Before looking at a new holiday let mortgage, it is worth asking your existing lender whether they would grant Consent to Let.
This can be the more cost-effective route, because:
- You keep your current mortgage and rate in place, although some lenders add a fee or adjust the rate
- You avoid any Early Repayment Charges that could apply if the mortgage is redeemed early
- There are no new arrangement, valuation or legal fees for a fresh application
Be specific when you ask. Consent to Let is often designed with standard long-term tenancies in mind, and some lenders will not extend it to holiday or short-term letting.
Make sure they know the property will be let to holidaymakers, and get any consent in writing.
Some lenders, including Barclays, allow occasional letting of your home through approved platforms such as Airbnb for up to 90 nights a year without full Consent to Let. This suits letting while you are away, not a full-time holiday let.
If your lender says no, or the terms do not suit, that is the point to look at a dedicated holiday let mortgage.
3. Check for restrictive covenants
This is the area that catches people out most often. A restrictive covenant is a condition on the property’s title that limits how it can be used. Some date back decades, long before holiday letting was common, but they still apply today.
If a covenant prohibits holiday letting or business use, lenders will usually decline the application automatically.
There is typically no appeal process or workaround at application stage, so it pays to check before you apply, not after.
Typical wording to look out for includes:
- “May only be used for residential occupation”
- “May only be used as a private dwellinghouse”
- “For use as a single private residence only”
- “Not to be used for any trade or business”
How to check your title
You can order copies of your title register and any deeds referred to in it from HM Land Registry for a small fee. Start here: www.gov.uk/get-information-about-property-and-land/copies-of-deeds.
If the wording is unclear, a solicitor can tell you whether it is likely to affect holiday letting.
Leasehold properties: read the lease
If the property is leasehold, such as a flat, the lease needs checking too. Many leases restrict short-term letting, either directly or through clauses limiting use to a private residence or banning business use.
Lenders will review the lease as part of the application, and a restriction here can stop a holiday let mortgage just as firmly as a covenant. If you are unsure, ask your freeholder or managing agent, or have a solicitor look over the relevant clauses before you go further.
Before you speak to a broker
Having these answers ready makes the first conversation far more productive:
- Is the property in an area that attracts holidaymakers?
- Have you asked your current lender about Consent to Let for holiday letting?
- Do you know whether Early Repayment Charges apply to your current mortgage?
- Have you checked your title for restrictive covenants?
- If leasehold, does the lease allow short-term letting?
It is also worth checking local planning rules and arranging specialist holiday let insurance before your first booking.
How Drake Mortgages can help
As a whole-of-market specialist broker, we work with the lenders who understand holiday lets. We will look at your property, your current mortgage and your plans, and identify the most suitable route, whether that is Consent to Let or a new holiday let mortgage. Call us on 020 8301 7930
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