What is a holiday let mortgage?
A holiday let mortgage is a specialist mortgage for a property let to paying guests on short stays — days or weeks rather than months. As of July 2026, you typically need a 25% deposit, rates run roughly 1–2 percentage points above equivalent buy-to-let deals, and lenders assess the loan against a letting agent’s projection of seasonal holiday income rather than a monthly rent.
You cannot simply run a holiday let on a standard residential or buy-to-let mortgage: residential mortgages prohibit commercial letting, and almost all buy-to-let mortgages require an assured shorthold tenancy (AST) of at least six months. Letting a property on Airbnb or similar platforms without the right mortgage usually breaches your mortgage conditions.
How is a holiday let mortgage different from buy-to-let?
Both are investment mortgages secured on a rental property, but they differ on almost every practical measure:
| Holiday let mortgage | Buy-to-let mortgage | |
|---|---|---|
| Tenancy type | Short stays (nights/weeks), no AST | AST of 6+ months |
| Income assessed on | Agent’s low/mid/high season projection or trading accounts | Single monthly market rent |
| Typical deposit (July 2026) | 25% (30–35% for first-time landlords) | 20–25% |
| Typical pricing (July 2026) | Roughly 1–2 points above BTL; representative ~5–6.5% | Best 5-year fixes from ~3.99–4.5% at 75% LTV |
| Lender pool | Smaller — mostly building societies and specialists | Most major lenders |
| Personal use | Usually allowed, ~60–90 days/year | Not permitted |
| Income potential | Higher gross income, but seasonal and void-prone | Lower but steadier |
Rate context: best buy-to-let 5-year fixed rates were around 3.99–4.48% at 75% LTV in early July 2026 (HomeOwners Alliance/Uswitch best-buy tables, checked 8 July 2026); holiday let products from specialist lenders typically price 1–2 percentage points higher. Figures are representative — your rate depends on deposit, property and circumstances.
What deposit do you need for a holiday let mortgage in 2026?
As of July 2026, the standard minimum deposit is 25% of the purchase price (75% loan-to-value), which is where most building society and specialist lenders sit. A small number of specialist lenders will consider 80% LTV (20% deposit) on strong cases in established tourist locations. Expect to need 30–35% if you are a first-time landlord, if the property is unusual (annexes, holiday parks, restricted occupancy conditions) or if the letting projection is marginal. A bigger deposit also unlocks meaningfully better pricing, because the holiday let market has fewer lenders competing at high LTVs. In prime hotspots such as the Lake District, a local mortgage broker in Ambleside can tell you which lenders are most comfortable at each LTV band.
How do lenders assess holiday let income?
This is the biggest practical difference from buy-to-let. Instead of a surveyor’s monthly rental figure, holiday let lenders typically want one of the following:
- A letting agent’s projection from a recognised holiday letting agency, showing expected weekly income in low, mid and high season. Lenders commonly average these across roughly 30 weeks of occupancy a year to allow for voids and owner use.
- Trading history for an established holiday let — usually a minimum of 12 months’ accounts, with some lenders wanting 24 months.
- An AST-equivalent rent — some lenders simply test the case as if the property were let on a normal tenancy, typically requiring rent to cover 145% of the mortgage interest stressed at around 5.5% in a personal name, or 125% for a limited company.
On top of the income test, most lenders require a minimum personal income of around £20,000–£40,000 evidenced separately from the letting income, permit personal use of 60–90 days a year, and decline properties with holiday-park ties or planning conditions that restrict year-round occupancy. (Criteria ranges: Fox Davidson and ABC Finance holiday let criteria guides, July 2026 — representative, each lender differs.)
💡 Get the letting agency projection before you apply. It is the single document most likely to make or break a holiday let application, and a strong projection can offset a smaller deposit or first-time-landlord status.
How are holiday lets taxed now the FHL regime has been abolished?
The furnished holiday lettings (FHL) tax regime was abolished from 6 April 2025 (1 April 2025 for corporation tax), so holiday lets are now taxed like ordinary residential lets (source: gov.uk/HMRC policy paper, Furnished holiday lettings tax regime abolition; checked July 2026). For anyone buying with a mortgage, the key changes are:
- Mortgage interest relief: previously fully deductible against FHL profits; now restricted to a 20% basic-rate tax credit, the same as any other individually owned rental property. Higher-rate taxpayers feel this most.
- Capital allowances: no longer available on new spending on furniture and equipment; instead you can claim replacement of domestic items relief, as for standard lets.
- Selling up: Business Asset Disposal Relief (10% CGT) no longer applies to holiday let disposals — residential property CGT rates of 18%/24% apply instead.
- Pensions: holiday letting profits no longer count as relevant UK earnings for pension contribution purposes.
One meaningful advantage survives, because it was never part of the FHL regime: business rates instead of council tax. In England, a self-catering property qualifies if it was available to let for at least 140 nights and actually let for at least 70 nights in the last 12 months (source: gov.uk — apply for business rates for a self-catering property). Many holiday lets then pay nothing at all under Small Business Rates Relief. Miss the thresholds and you pay council tax — potentially with a second-home premium of up to 100%, which councils in many tourist areas now charge. A holiday let registration scheme for England is also expected to be introduced during 2026.
⚠️ Since April 2025, limited company ownership has become more attractive for higher-rate taxpayers because companies can still deduct mortgage interest in full against profits. But company holiday let mortgages price around 0.1–0.4% higher and extraction of profits has its own tax costs — take advice from an accountant as well as a broker. See our guide to buying through a limited company.
Worked example: what yield can a holiday let generate?
A representative example at July 2026 pricing — a £300,000 coastal cottage bought with a 25% deposit:
| Purchase price | £300,000 |
| Deposit (25%) | £75,000 |
| Interest-only loan at 5.5% (representative) | £225,000 — £12,375/year |
| Agent projection: 10 low-season weeks @ £500 + 12 mid @ £700 + 8 peak @ £1,300 | £23,800 gross/year |
| Gross yield | 7.9% |
| Letting agency/platform fees (~20%) | −£4,760 |
| Cleaning, utilities, insurance, maintenance (typical) | −£4,200 |
| Business rates (with Small Business Rates Relief) | £0 |
| Mortgage interest | −£12,375 |
| Pre-tax cash surplus | £2,465/year |
The same cottage let on a standard tenancy at £1,200 a month would gross £14,400 — a 4.8% gross yield — with far lower running costs. That is the holiday let trade-off in a nutshell: substantially higher gross income, but heavy costs and seasonality mean the net advantage depends on occupancy. For the lender’s purposes this case passes comfortably: £23,800 projected income covers the stressed interest requirement (145% of £12,375 = £17,944) with room to spare.
Two costs to model before you offer: stamp duty — holiday lets attract the 5% additional-property surcharge, roughly £20,000 on this example at July 2026 England rates (check your figure with our stamp duty calculator) — and void risk, which you can stress-test with our buy-to-let yield calculator. All figures above are representative examples, not quotes.
How do you get a holiday let mortgage?
Because the market is dominated by building societies and specialist lenders that do not appear on mainstream comparison sites, most holiday let borrowers use a whole-of-market broker. A broker will match the letting projection, property type and ownership structure (personal vs limited company) to the lenders whose criteria fit — and lender criteria in this niche vary far more than rates do. Nesto is a free introducer: answer a few questions and we will match you with an FCA-authorised buy-to-let and holiday let mortgage broker. For a comparison of current lenders, see our guide to the best holiday let mortgages; for impartial guidance on property investing generally, see MoneyHelper.
Holiday let mortgages: FAQs
How is a holiday let mortgage different from a buy-to-let mortgage?
A buy-to-let mortgage requires the property to be let on an assured shorthold tenancy of six months or more; a holiday let mortgage permits short-term stays of days or weeks. Letting a property on Airbnb-style short lets with a standard BTL mortgage usually breaches its conditions. Holiday let lending is assessed on projected seasonal letting income rather than a single monthly rent, comes from a smaller pool of mostly specialist and building society lenders, and is typically priced 1 to 2 percentage points higher than an equivalent buy-to-let deal.
What deposit do I need for a holiday let mortgage?
As of July 2026, most holiday let lenders require a deposit of at least 25% (75% loan-to-value). A few specialist lenders will consider 20% deposits on strong cases in established tourist locations, while first-time landlords and unusual properties typically need 30% to 35%.
Can I stay in my holiday let myself?
Usually yes, within limits. Most holiday let lenders permit personal use of the property for around 60 to 90 days per year. Personal use reduces the letting income the lender can count, and nights you or your family use the property do not count towards the letting thresholds needed to qualify for business rates instead of council tax.
Do holiday lets still get tax advantages after the FHL regime was abolished?
Most of the old advantages are gone. The furnished holiday lettings tax regime was abolished from 6 April 2025, so holiday lets are now taxed like ordinary residential lets: mortgage interest relief is restricted to a 20% basic-rate credit, capital allowances are no longer available on new expenditure, and reliefs such as Business Asset Disposal Relief no longer apply to holiday let sales. Qualifying properties can still pay business rates instead of council tax, which can mean a nil bill with Small Business Rates Relief.
Can I get a holiday let mortgage through a limited company?
Yes. A growing number of holiday let lenders accept limited company (SPV) applications. Rates typically sit around 0.1% to 0.4% above equivalent personal-name products, and lenders often apply a lower rental coverage requirement of around 125% instead of 145%. Since the FHL regime was abolished in April 2025, company ownership has become more popular because companies can still deduct mortgage interest in full against profits.
How do I get advice on a holiday let mortgage?
Because holiday let lending is a specialist market dominated by building societies and smaller lenders, most borrowers use a broker. Nesto is a free introducer service: answer a few questions at nesto.co.uk/form/ and we match you with an FCA-authorised broker who arranges holiday let mortgages. Nesto does not give regulated financial advice itself — the matched broker does.
Nesto is an introducer, not a lender or adviser: we connect you with FCA-authorised mortgage brokers and do not provide regulated financial advice. Rates, criteria and tax rules on this page are typical/representative figures drawn from the dated sources linked above and were last checked on 8 July 2026. Tax treatment depends on individual circumstances and may change — confirm current rules on gov.uk or with a qualified adviser.