An expat buy to let lends against long-term rent, and the mortgage terms stop you staying there yourself. An expat holiday let lends against seasonal bookings and usually allows 30 to 60 nights of your own use. Holiday lets lost their tax advantage in April 2025, so the decision now rests on use, currency and distance. Call us on 020 8301 7930 to talk it through.
You are living and working abroad, the deposit has been sitting ready for a while, and you want a UK investment property. Somebody has probably told you that holiday lets earn more than buy to lets.
For years that was a reasonable rule of thumb, because holiday lets had their own tax regime and the sums worked out differently. That regime went in April 2025. The comparison articles you have been reading were mostly written for someone who lives forty minutes from the property, not four thousand miles from it.
Three things change the answer once you live overseas: whether you can ever use the place yourself, how a lender reads a salary paid in dirhams or dollars, and what it costs to run a short-let business from another time zone.
An estimated 246,000 British nationals left the UK in the year ending December 2025, according to the Office for National Statistics, so you are far from alone in working this out from overseas.
This article walks through both routes so you know which one fits, what each will lend against, and which tax rules apply to you as a non-resident that would not apply to an investor based here.
What is the difference between an expat buy to let and a holiday let mortgage?
An expat buy to let mortgage lends against long-term rent from a tenant on an assured shorthold tenancy, and you cannot use the property yourself at all.
With an expat holiday let mortgage, the lender looks at projected seasonal letting income instead, and usually permits 30 to 60 nights of your own use each year. That version gives you a business to run rather than an asset to hold, and running one from overseas eats more of the gross income than most projections show.
Until April 2025, holiday lets carried tax advantages that often settled the argument on their own. Those advantages have gone. What is left is a straight operational and lifestyle comparison, and for someone living abroad that lands differently than it does for a UK-based landlord.
What is an expat buy to let mortgage?
An expat buy to let mortgage is a UK mortgage for a British national living overseas who wants to buy a UK property and let it to a tenant to use as their main home. The tenancy is almost always an assured shorthold tenancy, which gives the tenant the right to stay for the agreed term.
You can hold the property in your own name or through a limited company. Most buy to let lending is not regulated by the Financial Conduct Authority, which is worth understanding before you start.
How do lenders decide how much you can borrow?
Borrowing is set by a rental stress calculation rather than a multiple of your salary. The lender takes the market rent the property should achieve, then checks that the rent covers the interest mortgage payment at an assessment rate higher than the rate you will actually pay.
If the rent clears that hurdle, the loan works.
Your personal income still matters when you apply. Lenders want to see a stable salary, and some will use surplus personal income to support a loan where the rent alone falls slightly short.
Deposits start at around 25% of the property value, and some lenders want up to 40% depending on your country of residence and how your income is structured. The source of the deposit needs a clear paper trail because of anti-money laundering rules.
Can you stay in your own expat buy to let property?
You cannot stay in the property.
Not for a fortnight in August, not for a weekend, and not during the gap between one tenant leaving and the next arriving without asking the lender first.
Running it quietly as a short let is not an option either. Letting a buy to let property to holidaymakers breaches the mortgage conditions, and the lender is within its rights to demand the loan back.
If you are unsure where the line sits, our guide to consent to let covers it.
What is an expat holiday let mortgage?
An expat holiday let mortgage is for a UK property let to paying guests on short stays. The property has to be fully furnished to a standard guests will book, and it needs specialist holiday let insurance rather than a standard landlord policy.
Guests pay in advance and have no right to stay beyond the nights they have booked. In law that is a very different thing from a tenancy.
It is also why you cannot swap one mortgage for the other.
How do lenders work out a holiday let loan?
The sums start with a seasonal rental forecast.
A letting agent who knows the local market puts it together for you. Most lenders then average the low, mid and high season weekly rates, allow 30 weeks of the year into the calculation, and stress test what is left. A couple of lenders work from the gross annual total instead.
Interest cover sits commonly between 125% and 145% at a stressed rate, so the projected income has to clear the payment by a wide margin.
Lenders also want earned income from outside the property. The figure sits somewhere between £20,000 and £40,000 a year depending on who you speak to, and it varies between lenders more than almost anything else on an expat file. Maximum loan to value is 75%, so a 25% deposit.
A person reads most holiday let applications rather than a computer. That gives a strong case room to breathe in a way an automated buy to let decision does not.
How much of the property can you use yourself?
Most expat holiday let lenders allow between 30 and 60 nights of personal use a year, with a handful of more generous societies stretching to 90. A few permit no meaningful personal use at all.
The cap is contractual rather than a guideline, and the lender counts. We have written about how the night count works in more detail, including what happens if you go over.
Expat buy to let vs holiday let compared
| Expat buy to let | Expat holiday let | |
|---|---|---|
| Let to | One tenant, long term | Holidaymakers, short stays |
| Agreement | Assured shorthold tenancy | Booking, no tenancy rights |
| Affordability based on | Market rent, stress tested | Seasonal projection, commonly 30 weeks allowed |
| Your own use | None | Usually 30 to 60 nights, up to 90 with some societies |
| Deposit | From 25%, some lenders to 40% | 25% |
| Furnishing | Optional | Fully furnished, to a guest standard |
| Insurance | Landlord policy | Specialist holiday let policy |
| Running costs | Agent fee, maintenance, voids | Agent fee, changeovers, cleaning, laundry, gardening, greeting guests, utilities, marketing |
| Gross income | Lower | Usually higher |
| Net income | More predictable | Depends heavily on occupancy and cost control |
| Income risk | Tenant default, voids between tenancies | Seasonality, weather, a poor review, a quiet summer |
| Company or SPV | Available | Available |
| Local tax | Council tax normally the tenant’s | Business rates if letting thresholds are met, otherwise council tax |
| Managing it from overseas | Close to passive once let | An operating business |
| Lender pool for expats | Wider | Narrower |
Three things that change the answer when you live abroad
Personal use: none at all, or rationed
For an investor with a home an hour up the road, “no personal use” costs nothing. They were never going to stay there anyway.
Living overseas changes that completely.
It becomes the difference between owning somewhere to be when you come home and owning a spreadsheet entry. Buy to let gives you nothing.
A holiday let gives you an allowance, and a Christmas trip plus a summer fortnight plus one visit nobody planned will use most of it up.
If being able to stay there matters at all, this comparison may be the wrong one for you. There is a third structure, and we come back to it below.
Currency: how your salary is read decides what you can borrow
Both routes lend mainly against rent, so it is tempting to assume your salary hardly matters. It matters in two specific places.
The first is the minimum income test on holiday let products.
If a lender converts your salary to sterling and then cuts it by a fifth to absorb exchange rate risk, a borrower who is comfortably over the threshold can land under it. The property has not changed. The reading of your payslip has.
It matters again with ‘top-slicing’. Where a lender will use surplus personal income to support a loan the rent cannot quite carry, the same reduction shrinks what that surplus is worth.
Some lenders convert to sterling and discount, sometimes by 20% or more. Others assess income and expenditure in your own currency, in as many as 20 of them, with no percentage reduction applied.
Which camp your lender falls into can move your maximum borrowing by six figures. That applies to both routes, but it bites harder on holiday let because of the income floor sitting underneath it.
Distance: one is an asset, the other is a business
A buy to let with a managing agent is close to passive. A tenant moves in, the rent arrives, and something needs your attention two or three times a year.
Holiday letting is an operating business.
Changeovers every few days in season, laundry, cleaning, restocking, guest messages, pricing, reviews, and maintenance that cannot wait until you are next in the country. From another time zone you cannot do any of it yourself, so every part of it is bought in.
Gross income from holiday letting is always higher than from a long-term tenancy.
But so are the costs, and for an overseas owner they are higher again, because there is no version of this where you drive over on a Saturday morning and sort it out. Full management is not optional for you in the way it might be for someone living nearby.
This is why lenders ask for a service agent agreement on holiday let applications. It is not a formality. It is the lender checking that somebody is actually running the thing.
The tax reason to choose a holiday let has gone
The furnished holiday lettings regime was abolished from April 2025. Income and gains from a furnished holiday let now form part of an ordinary property business and are treated in line with other property income (like a buy to let).
Four advantages went with it:
- Tax relief on your loan interest is now capped at the basic rate, as it already was for buy to let
- Capital allowances on new spending have gone. You get replacement of domestic items relief instead
- The capital gains reliefs that applied to trading business assets have been withdrawn
- Holiday let profits no longer count as earnings for pension contributions
Does a holiday let pay business rates or council tax?
One difference did survive, and it is the one most people overlook.
In England, a holiday let moves onto business rates rather than council tax once it passes two tests. It has to be available to let for 140 days in a 12-month period, and actually let for 70 of them. You also need to plan on making it available for 140 days in the year ahead. A new holiday let stays on council tax until it clears both tests.
Wales sets the bar much higher. The property must be available for 252 days and actually let for 182 days.
Two changes softened this from 1 April 2026. The letting test can now be met on a two-year average where the most recent 12 months falls short. Up to 14 days a year of short breaks donated to charity also count towards the total.
Why the Welsh thresholds land hardest on expats
Look at what those Welsh numbers ask of you. You need 182 days actually let, while your mortgage caps your own use at perhaps 60 nights. That leaves roughly 123 days across the year for voids, changeovers and the quiet months, in a market that is heavily seasonal by nature.
Miss the 182 days and the property drops back to council tax, where councils in Wales have discretion to charge a premium on second homes of up to 300% of the standard bill. Premium levels are set council by council and reviewed annually, so check the position with the specific local authority before you commit.
You carry more exposure here than a UK-based owner for a plain reason. You are not there.
You cannot rescue a slow October by taking a late booking and doing the changeover yourself on the Friday. The owners who miss the threshold tend to be the ones furthest from the property.
A buy to let has no equivalent cliff edge, and that is worth weighing properly if you are looking at Wales.
The tax rules that apply to you either way
Three things apply to you as a non-resident on both routes.
Under the non-resident landlord scheme, if your usual place of abode is outside the UK, your letting agent has to deduct tax from your rental income and account for it to HMRC each quarter. You can apply to HMRC for approval to receive the rent gross, but approval does not make the income exempt. You still settle up through self assessment.
On stamp duty, non-UK residents pay a 2% surcharge on homes in England and Northern Ireland. It sits on top of everything else you owe, including the higher rates for a second property. You count as non-resident if you spent fewer than 183 days in the UK in the year before you bought. Meet the test later and you can claim the 2% back.
There is also a reporting deadline on capital gains. Non-residents have to tell HMRC about a disposal of UK property within 60 days of completion, whether or not there is any tax to pay.
Tax treatment depends on your own circumstances and can change. We are not tax advisers, and we would always suggest taking independent tax advice before you commit to either route.
Which route suits which expat?
You want somewhere to stay when you come home. Strictly speaking, neither of these. Read the next section.
You want as little involvement as possible from a different time zone. Buy to let. Predictable, close to passive once let, a wider pool of lenders, and no letting-day thresholds to fall foul of.
You want the higher gross and you will pay for full management to get it. Holiday let, with realistic costs built into your numbers rather than an agent’s headline yield.
Your salary looks modest against the loan you want. A holiday let may lend more against a strong seasonal projection. Check the minimum income floor and how the lender treats your currency before you assume it.
The third route most expats are never shown
If your honest answer to “why do you want this property” includes “so I have somewhere to stay”, neither of the two products above gives you that.
There is a third structure, sitting in expat residential lending rather than the holiday let aisle, that permits short letting without rationing your own nights.
It reaches a higher loan to value and it is frequently cheaper than both. Our page on expat holiday let mortgages sets out how it compares.
How we place expat investment cases
Every broker here has at least 20 years of experience. Mark Lanario, who leads our holiday let and specialist property finance work, has been advising clients since 2006.
We are whole of market, so we can place cases with lenders you cannot approach directly. Before anything is submitted, we check your profile against each lender’s rules on personal use, currency, residency and minimum income. Your case then goes to a lender that has already said yes in principle to your shape of application.
Tell us your time zone and we will work to it.
Making the decision
The tax argument that used to settle this question is gone. What decides it now is how much of the property you want to use yourself, how a lender reads your income, and how much of a business you are willing to run from the other side of the world.
Get those three straight and the right answer is usually obvious within a single conversation.
Call us on 020 8301 7930 or email info@drakemortgages.co.uk to speak to one of our experienced advisers. Tell us where you live and what you want to buy, and we will tell you honestly whether it is fundable and which route fits.
FAQ
Can an expat get a buy to let mortgage in the UK?
Yes. Most high street banks decline non-UK residents, but specialist lenders and international building societies lend to British nationals living abroad. The lender pool is smaller than for UK residents and the criteria are tighter, so it comes down to picking a lender whose rules already fit your situation.
What deposit do I need for an expat buy to let mortgage?
Expect to put down at least 25% of the property value. Some lenders want up to 40%, depending on where you live, how your income is structured and what you are buying. You will also need a clear paper trail showing where the deposit came from, because of anti-money laundering rules.
Read more: Buy To Let Mortgage Deposits
Am I allowed to stay in my own expat buy to let property?
No. A buy to let is let to a tenant as their main home, and the mortgage terms exclude you from occupying it. That applies even to short stays between tenancies unless the lender agrees first. If you want to use the property yourself, buy to let is the wrong product.
Is a holiday let more profitable than a buy to let for an expat?
The gross income from holiday letting is higher. The net position depends on occupancy and costs, and for an overseas owner those costs run higher because full management is not optional. Since April 2025 there is no tax advantage tipping the balance either way, so compare the net figures rather than the headline yields.
Can I use a buy to let mortgage for short-term or holiday letting?
No. The two products are underwritten on different criteria and they are not interchangeable. Letting a buy to let property to holidaymakers breaches your mortgage conditions and the lender can demand repayment. It can also invalidate your insurance, which turns a cash flow decision into a much bigger problem.
How do lenders work out how much I can borrow on an expat holiday let?
Most take a seasonal rental projection from a local letting agent, average the low, mid and high season weekly rates, and allow 30 weeks of the year into the calculation. That figure is then stress tested, with interest cover commonly between 125% and 145%. A couple of lenders work from the gross annual total instead.
Do holiday lets still have tax advantages over buy to let?
No. The furnished holiday lettings regime was abolished from April 2025, and holiday let income and gains are now treated as part of an ordinary property business. Interest relief, capital allowances, capital gains reliefs and pension treatment have all been brought into line with buy to let. Take independent tax advice on your own position.
Is limited company or SPV ownership available to expats?
Yes, both are available through a limited company or special purpose vehicle. Lenders usually price company borrowing slightly higher, and you take on accountancy and filing costs to run it. Whether the structure is worth it depends on your tax position, so speak to a tax adviser before deciding.