Articles:
Holiday Let: What exactly is it? SB May 2007
So you are looking for a
holiday let mortgage. But are you sure you
know exactly what a holiday let means?
This may seem a silly question. But there’s a
lot of confusion between “holiday lets” and
“buy-to-lets”, and between “holiday lets” and
“holiday homes”. Getting a holiday let mortgage
is quite different from getting a mortgage on
either a
holiday home or a buy-to-let. So what are
the differences?
A holiday home is a second home which you
buy for your own use or the use of your family
and friends, while a holiday let is a
property you buy to let out commercially as a
business.
A
holiday let is quite different from a
buy-to-let property, which is let out for
residential use and is regarded as an
investment, not as a business.
So if you are looking for a holiday let
mortgage, how can you be sure your property can
be defined as a holiday let?
The Inland Revenue is quite clear as to what
makes your property a holiday let. This is a
Good Thing, because there are a lot of tax
advantages in being treated as a business not an
investment.
To count as a
furnished holiday let as far as the Inland
Revenue is concerned:
The property must be in the UK.
It must be available
for letting for
at least 20 weeks (140 days) in a year.
Remember this is the minimum as far as the
taxman is concerned. If you use a lettings
agency, some demand a much higher
availability than this – some as much as 50
weeks in the year!
It must achieve an
actual letting
rate of 10 weeks (70 days) in the year. This
must be at the commercial rate, not at a
reduced or non-profit rate for family and
friends.
It must not be let to one single occupier or
group for more than 31 days in a seven-month
period, although it can be during the
remaining five months of the year.
The property has to be fully furnished.
If you’re sure your property qualifies, you can
then start looking for the right kind of
mortgage. A holiday let mortgage is a bit
harder to arrange than a standard buy-to-let
mortgage and not all lenders want to know.
However, there are some who will be happy to
consider it. If you talk to a good Independent
Financial Adviser or mortgage
broker, they will point you in the right
direction for your
holiday let mortgage.
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