Landlords seeking mortgages to benefit from holiday market rental yields

Airbnb: How easy is it to get a mortgage for a short-term let?

Airbnb and short-term lets as an asset class have become more commonplace in recent years, and there are numerous mortgage options available to owners.

The short-term rental space has seen tremendous growth in a relatively short space of time, spurred on by an increase in the “sharing economy”, a rise in the number of people holidaying locally since the pandemic, and the popularity of platforms like Airbnb and making whole-home accommodation options easier to access.

For homeowners and property investors alike, it offers an alternative way to make extra money by renting out a room or a property, and there is the scope to make greater profits than in the long-term buy-to-let market.

One of the issues those who wish to use Airbnb and similar platforms can face, though, is getting an appropriate mortgage. Airbnb itself recently called on lenders to do more to accommodate such platforms, backed up by a survey conducted by the company.

Blocked by mortgage companies

According to Airbnb’s research, nearly half of homeowners (47%) who are looking to boost their incomes would list their property on a platform such as Airbnb in order to cover their rising mortgage costs.

However, a further 40% said that their lender would not allow them to rent out their home or spare room on their current mortgage. In a separate survey by Together, a similar result was recorded, with 24% of people considering renting out a holiday let – rising to 51% for 18 to 34-year-olds.

This is why Airbnb is urging mortgage providers to work with them to give customers more mortgage options.

Airbnb general manager for Northern Europe, Amanda Cupples, says: “With mortgage rates and inflation continuing to climb in the UK, British families are turning to hosting on Airbnb as a tool to afford rising living costs.

“In normal times, this activity, which for most hosts would be for no more than a couple days a month, offers flexibility and a source of additional income, but in the current climate, it could be a lifeline.”

Cupples adds: “We want to work with lenders and show them the benefits of home sharing so they can update their policies and let homeowners make their homes work for them.”

So how can you get a mortgage for Airbnb?

It is possible and in some cases relatively uncomplicated to get a mortgage specifically to rent out your property or part of it on Airbnb or a similar platform, on a short-term let basis. But there are some criteria and considerations to take into account first.

You need to decide how you plan on conducting your let. Will you let out the whole property, or live in it while renting out part of it? How many days per year do you plan on letting it out?

Depending on your individual circumstances, the type of mortgage you need will vary. Most commonly, you will use a buy-to-let mortgage to rent out a property on Airbnb, but not all BTL lenders offer this option.

If you’re living in the property while renting out a room or rooms, you may be able to do this on your existing residential mortgage, but again this depends on your lender and your circumstances. Normally, there is a maximum limit for short-term lettings of 90 days per year.

The government also supports this with its Rent a Room scheme, meaning homeowners can earn up to £7,500 in rent per year tax-free if they take in a lodger.

Other options available include specific holiday let mortgages, available from specialist providers provided you meet certain criteria, and in some cases, commercial mortgages.

Comments from the industry

Bim Afolami MP, All-Party Parliamentary Group on Financial Markets and Services chair, says: “Allowing homeowners the flexibility to occasionally let out their property as a means of earning some extra income is a clear win for mortgage providers and could provide an important lifeline to those who might be struggling in these difficult economic times.

“Banks and building societies can follow the example of lenders who are offering flexibility to their customers and allowing them to take up the benefits of homesharing.”

Together commercial chief executive Marc Goldberg says: “Staycations have been in extreme demand – with bookings reaching all-time highs this year – and their popularity looks like it’s here for the foreseeable future.”

“Whether families wish to stay in the UK to control costs, avoid getting caught up in potential airport travel issues, or just want to experience the UK’s beautiful countryside, there are lots of new holiday letting opportunities cropping up as more people recognise the income benefits of becoming a full or part-time host.”

“Mortgage applications for holiday let properties are not always available from mainstream lenders, so it’s worth potential holiday let owners talking to specialist lenders.”

If you’re a property investor considering letting out or investing in a property to let out on Airbnb, get in touch today to find out about our short-term and long-term opportunities.

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