Regulation in the self-catering industry: mortgages and short-term lets

This is the next in our series of articles on regulations in the self-catering industry, it will examine mortgages and short-term lets. We understand how important it is that self-caterers provide high quality, legally-sound accommodation for their guests, and having the correct mortgage is a big part of that.

Do you have the right type of mortgage?

There are lots of mortgages on the market, this article by London & Country provides a good overview. Most buy to let mortgages require properties to be let on Assured Shorthold Tenancy agreements (ASTs). These are only permitted when property is let out as a fixed term for a minimum of six months, therefore shorter lets are not permitted. So if your holiday rental mortgage has been secured on a buy to let mortgage, we recommend you contact your lender to clarify this meets your terms and conditions.

Mortgage lenders are savvy, and are likely to carry out checks to ensure their clients are adhering to their mortgage agreement (they can search online for a holiday property as easily as a guest can). If a lender finds a buy to let property is offering short-term rentals, the owner could be required to pay back the full mortgage amount or be listed on the Hunter Fraud Prevention List.

Where can I get the correct mortgage?

There are lending options for self-catering accommodation owners and agencies that offer short-term lets. In the UK there are currently eight holiday let mortgage lenders¹, not all of them lend to limited companies or portfolio landlords, but there are certainly options for all.

We recommend you consult a holiday rental mortgage broker (a quick online search will show you which companies provide this), you will receive specialist advice and then find the mortgage that’s most suited to your business needs.

Cumberland Building Society’s portfolio includes holiday rental mortgages. Grant Seaton, the company’s Senior Business Lending Manager explains further:

“Having been involved in lending to the self-catering sector for a number of years, we are aware that finding the right lending advice can be challenging for property owners.  At The Cumberland we accept business directly from owners, or via brokers.   The Cumberland will also lend when it is a portfolio of property or via a Limited Company structure.

My best advice to Super Control clients would be to contact a lender who has the expertise to understand your business, as having the correct structure in place is crucial to helping you grow your business to its full potential.”

Takeaway advice

If you have any doubts at all, please speak to your lender to double check you have the correct type of mortgage.

Read the next article in the series


¹ Mortgages for business