First-time holiday let landlords

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    Becoming a holiday let landlord can be a daunting prospect and let’s face it, it’s a role that requires substantial work; to run a successful holiday let, you need to put in the planning beforehand and oversee operations once things are up and running. That being said, you don’t necessarily need prior experience as a landlord to guarantee success. It’s far more important that you research the letting market and understand the holiday let mortgage process before buying your first holiday let.

    Will mortgage lenders want to see that I have experience in letting?

    Most mortgage lenders don’t focus on your past experience and will allow first-time holiday let landlords. Those lenders that do look for letting experience will only lend to applicants who have at least 12 months’ experience, either as a buy-to-let or holiday let landlord.

    Generally speaking, while landlord experience isn’t imperative, it does help if you own your own property, and difficulties can arise if you don’t own the house that you live in.

    Plus, while lenders usually won’t worry about your experience renting out property, they will want to see that you have selected a reputable holiday let agent, such as who will help you put together a solid business plan and can give guidance as to your predicted gross rental income.

    I have experience as a buy-to-let landlord. Will this help?

    If the mortgage lender is interested in your letting experience, ownership of a buy-to-let would tick the right boxes. However, not all buy-to-let mortgage lenders will lend to holiday let properties. So, even if you already have a buy-to-let mortgage in place, you might not be able to apply for a holiday let mortgage with the same lender.

    I have prior experience as a holiday let landlord – is another mortgage guaranteed?

    Even if you already run a successful holiday let (or multiple lets), a new mortgage still isn’t guaranteed, and you will still need to meet the lender’s criteria. This includes:

    • Providing evidence of your deposit. If you need to take money out of one of your other holiday let properties to provide the capital for a deposit, you’ll need to sort the paperwork around this.
    • Having an annual gross rental projection for the new property, as verified by a reputable agency. Proving the success of your other holiday lets won’t suffice.
    • Some holiday let mortgage lenders have a maximum portfolio stipulation, so owning multiple holiday lets isn’t a direct ticket to securing a mortgage.

    Indeed, it’s worth noting that many lenders will limit the maximum number of rental properties to three per applicant. In the lending world, when a landlord holds four or more rental properties, they technically become known as a ‘portfolio landlord’. Many building societies don’t like to lend to portfolio landlords because of the additional risk that holding such a large number of properties brings.

    What should I know before getting my first holiday let?

    Mortgage considerations

    More important than having letting experience is having a good business plan in place. Mortgage providers want proof that lending money against your holiday let property doesn’t pose them any risks. This means that as well as meeting a minimum personal income requirement, you must prove that your holiday let will generate a good level of rental income – more than enough to cover your monthly mortgage payments.

    It’s also important that you choose the right property. Again, even if you can boast a wealth of letting experience, mortgage lenders will not loan to properties that are deemed a risk. This includes places that are dilapidated and in need of serious repair or reconstruction; properties that aren’t of standard construction and don’t meet today’s safety standards; and properties that are close to busy commercial buildings, to name a few common issues.

    How should I be prepared?

    When buying a holiday let, it’s imperative that you’re ready to deliver excellent customer service and be professional whilst handling guests. Again, this is more important than your experience as a landlord; someone may have ten years’ experience to their name, but if they don’t keep things to an excellent standard and are lacking with their customer service, they won’t be as successful.

    As competition in an increasingly popular market grows, holiday let owners are going above and beyond to exceed guests’ expectations. It’s worth noting that if you do already own one or multiple holiday lets, you are able to spread yourself across all of them and don’t let standards slip due to the amount of work involved.

    Getting the property ready

    • Decide the maximum occupancy.
    • Design the layout of the rooms and the seating/ beds in those rooms.
    • Furnish the inside and tend to the garden.
    • Fill the property with consumable supplies such as tea and coffee, and soap
    • Create an information booklet and for the extra level of luxury, a welcome pack complete with tasty treats or toiletries, for example.
    • Get professional photography done for marketing purposes.

    Getting the right service partners in place

    • Provide guests with a list of phone numbers for local services and emergency contacts.
    • If you aren’t doing it yourself, appoint a housekeeping team.
    • Find reliable tradesmen who you can contact should anything go wrong with the property.
    • Arrange a meet and greet with guests, if needed.

    Sort out the legalities

    There are certain health and safety checks to undertake if you’re operating a holiday let, some of which are a legal requirement. These include:

    • Gas safety: getting your boiler serviced and fitting carbon monoxide detectors.
    • Portable Appliance Testing: this isn’t mandatory but advised.
    • A fire assessment. You should also adhere to regulations by supplying fire equipment such as alarms and a fire blanket.
    • Arrange suitable holiday let insurance.

    Work out a marketing strategy

    Savvy marketing is key in a competitive holiday let market. You should create a professional website and social media accounts which are regularly updated. As well as this, it’s highly advisable to promote your holiday let through a marketing channel. These include:

    • A professional holiday letting agency such as Holiday Cottages (sometimes known as Travel Chapter).
    • A do-it-yourself platform such as Airbnb, VRBO or TripAdvisor.

    Set a pricing structure

    Equally as important as your marketing strategy is your financial plan. Holiday let properties can be highly profitable, so long as they are managed well. You will need to set the pricing plan for your holiday let, as well as deciding on discount plans and offers to entice bookings during off-peak seasons. The best way to gauge an idea of what works is to look at the competition.

    To conclude

    As you can see from what we’ve discussed, when it comes to holiday letting, it’s far more important to be prepared than experienced. As letting experience isn’t generally at the forefront of mortgage lenders’ minds, you shouldn’t worry if you’re applying for a holiday let mortgage as a first-time landlord.

    If you have any questions about holiday letting or want to get started, we are always here to help! Contact us here to get started.

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    Andy Soye

    Founder @ Holiday Cottage Mortgages
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      The information contained in this article is accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time and so please speak to one of our Consultants to confirm the most accurate up to date information. Nothing in this article constitutes financial advice. You understand that by clicking any external links on this page that you will be leaving the website of Holiday Cottage Mortgages and we cannot be held responsible for the content of this external website. Please always consult your accountant or solicitor for all financial, taxation or legal matters.