The mortgage
You need a holiday-let mortgage, not an ordinary buy-to-let one; standard buy-to-let terms require an assured shorthold tenancy and prohibit short lets. A shrinking but real group of lenders, mostly building societies and specialists, offer holiday-let products through brokers.
How the income is assessed
Lenders take a projected income from a holiday-letting agent or an independent valuer: typically an average of low, mid and high season weekly rates multiplied by an expected occupancy (often 30 to 35 weeks a year). The rental cover test is then applied to that figure, often at 125% to 145% and a stress rate, and some lenders also check that the property would cover the mortgage as an ordinary AST let, as a fallback.
- Loan-to-value: usually 70% to 75%.
- Personal income: more important than in buy-to-let; many lenders want a minimum (£25,000 to £40,000) because holiday income is seasonal.
- Personal use: some lenders allow it for a few weeks a year; others do not.
- Location and property: lenders like established holiday areas and dislike unusual construction, restrictive covenants and holiday-park properties.
Planning and local rules
England is introducing a registration scheme for short-term lets and a separate planning use class for them, with councils able to require planning permission; Scotland requires a short-term let licence; Wales has raised council tax premiums and tightened the occupancy rules for business rates. Lenders will ask whether you have what the area requires. Check before you apply, and before you buy.
The tax change
The furnished holiday lettings tax regime ended in April 2025. Holiday lets are now taxed like ordinary rental property: mortgage interest is no longer deductible for individuals (20% credit instead), capital allowances on furniture are gone (replacement relief instead), and the capital gains tax reliefs for business assets no longer apply. Profits also no longer count as earnings for pension contributions. For some owners a limited company now makes more sense; for others the sums have changed enough to reconsider the property. An accountant should look at it.
Switching between holiday let and buy-to-let
Common in both directions as the tax and the tourist market change. It means a remortgage onto the other product type, a change of insurance, and, if going to a long let, a tenancy agreement and the landlord obligations that come with it.
A note on the numbers. Rental cover ratios, stress rates, loan-to-value limits and fees are typical of the market at the time of writing (2026) and differ from lender to lender. Tax rules are for individuals and companies resident in the UK and change with each Budget. This is general information, not advice: a broker will tell you what applies to your property, and an accountant what applies to your tax.
Common questions
Can I use a buy-to-let mortgage for Airbnb?
No. Standard buy-to-let terms require a tenancy agreement and prohibit short lets. Letting on Airbnb on a buy-to-let mortgage is a breach; you need a holiday-let product.
How do lenders work out holiday let income?
From a letting agent's or valuer's projection: an average weekly rate across seasons times expected occupancy, typically 30 to 35 weeks. Some also check the property would cover the mortgage on a normal let.
Is a holiday let still worth it after the tax changes?
It depends on the property and your tax position. The end of the FHL regime removed several advantages. Run the numbers with an accountant before you refinance.
Your deal is ending. Let's get a broker on it.
Two minutes of questions about the property. We match you with a buy-to-let specialist who calls you back, usually within one working day. Free, no obligation.