Industry Insight Episode 8
In case you missed our previous episodes, you can catch up below:
- dustry Insight | Multigenerational Living Is On an Extraordinary Rise | 2020“
- “Industry Insight Episode 2 | Challenges in the Mortgage Industry: An Amazing Read“
- “Industry Insight Episode 3 | Uncovering the Potential of Annexes as Holiday Lets“
- Industry Insight Episode 4 | Making the Dream Achievable | A Blissful Ending
- Industry Insight Episode 5 | Summer Houses | Discover An Option for ‘Year Round’ Homeworking
- Industry Insight Episode 6 | Amazing New Housing Options Post COVID-19
- Industry Insight Episode 7 | High Street Demise Creates Housing Opportunity Uncovered
In this eighth episode, we discuss “Another Year of the Staycation Summer?”
It seems like yesterday we were discussing last year’s burgeoning holiday lets market. Now, we are experiencing similar trends for 2021. Deterred by quarantine hotels, country restrictions, and the risk of catching coronavirus, Brits are preparing for another summer of staycations.
With travel restrictions still a major concern, many opt for UK-based holidays. This trend provides a unique opportunity for the UK holiday let market. Homeowners are increasingly turning their properties into holiday lets, hoping to capitalise on this shift.
Flexible Mortgages
The UK mortgage market is adapting to these changes. Lenders are offering more flexible mortgage products tailored to holiday lets. These products help homeowners maximise their property’s potential.
In addition, staycations have revitalised local economies. Small towns and rural areas are benefiting from increased tourism. This influx of visitors boosts local businesses, creating a positive economic ripple effect.
However, there are challenges to consider. Increased demand for holiday lets could drive up property prices. This rise may make it harder for first-time buyers to enter the market. Additionally, the quality of holiday let properties varies greatly, which could affect customer satisfaction.
Despite these challenges, the trend of staycations shows no sign of slowing down. The UK mortgage market continues to evolve, providing opportunities for homeowners and investors alike. Stay tuned for more insights in our upcoming episodes.
Industry Insight Episode 8 | Increase in the UK Holiday Lets market
At Harpenden, we’ve noticed a surge in holiday let inquiries. The demand for UK holiday accommodation drives this increase. According to Hoseasons, peak summer holiday bookings for 2021 have risen by 67%. Similarly, Cottages.com has experienced a 50% increase. Despite government caution about planning summer escapes before lockdown restrictions lift, holiday-makers are booking in droves. They are determined not to be left behind. Consequently, this trend has led to viewing holiday lets as a lucrative income source.
A survey by Park Leisure in Property Wire revealed that “more than three-quarters of Brits (77%) aspire to own a holiday home in the UK”. This indicates that many prospective buyers desire a secondary dwelling and extra income. This is especially true for those in larger cities like London, Manchester, or Birmingham. For them, additional space is an increasing concern. Even post-pandemic, the desire for more indoor space and outdoor access persists. Buyers are reassessing their core property needs. This insight is discussed in Industry Insight Episode 8.
Industry Insight Episode 8 | Reduced availability for summer 2021
Many people notice the high demand for holiday accommodation over the summer. We spoke to Huw Williams, a father of two and a keen traveller from London. To avoid the risk and potential disappointment of booking an overseas vacation, he began searching for a family holiday within the UK at the year’s start. Even that proved challenging. “We thought we’d be ahead of the game by searching in January—a full 8 months before our intended travel. But we quickly found that many places were already booked.
According to the booking platforms we were using, some of our preferred destinations were already at 90% capacity. It’s particularly difficult when searching for family-friendly accommodation. We ideally need a decent-sized house or apartment for self-catering. We couldn’t believe how few options were left.” – Industry Insight Episode 8
Significant Gains
“With holiday lets in desirable locations already snapped up, those marketing their rentals look to make significant gains. Dan Collins, an entrepreneur from Hertfordshire, has seized the staycation opportunity. He shared this: ‘Seeing my Airbnb barn conversion succeed last year, I wanted to expand my portfolio. I’ve just finished refurbishing a four-bedroom property in Holt, North Norfolk.
The purchase was completed recently, and refurbishment took only three weeks. Photos have now been taken, and online promotion will start soon. We’re expecting 100% booking rates over the summer as the staycation trend continues. I’m already planning the next property purchase and exploring financing options. This type of investment is growing in popularity and is a robust business avenue for owners.’ ” – Industry Insight Episode 8
Industry Insight Episode 8 | A specialist lenders’ approach
We recommend prospective holiday let owners consider a specialist lender for their purchase. These lenders are experts in handling the unique aspects of buying a holiday let. Often, holidays give customers multiple income sources, which mainstream lenders may not accommodate.
Manual Underwriting vs. Algorithm-Based Assessment
Larger lenders typically use algorithms to assess applications en masse. This approach may reject non-standard financial profiles at the first step. We manually underwrite every mortgage application at Harpenden and some other specialist lenders. This method allows us to take a detailed view and assess the wider picture. Our goal is to say ‘yes.’
In-Depth Scrutiny for Complex Applications
Manual underwriting provides in-depth scrutiny, enabling complex holiday let mortgage applications to proceed. Our experience in this sector and refined criteria offer additional safeguards, benefiting the lender, expert broker, and customer. We use rental income projections and consider the client’s overall financial circumstances.
Ensuring Financial Stability
Our criteria ensure that customers have surplus income and funds to cover mortgage and running costs for up to three months. This is crucial if the property is without guests for a short period. Covering these gaps provides an additional safeguard for the loan’s sustainability.
Income Requirements and Opportunities
Specialist lenders have varying income requirements. Harpenden requires a minimum income of £30k, alongside the additional financial criteria mentioned. If you believe your client has a strong application for a holiday let property, we are keen to discuss the options further.
Capitalising on Opportunities in the Sector
Specialist lenders like us can help you capitalise on the increasing opportunities in this sector.
Credit – Jean Errington, Business Development Manager, Harpenden Building Society | Industry Insight Episode 8. Until next time, stay Connect!