The growth of Airbnb is reflected in the number of buy-to-let products enabling holiday let compared to a couple of years ago.
In August 2020 there were just 74 buy-to-let products which allowed holiday let, but that number has since risen to 231, according to data compiled by Moneyfacts.
Landlords wanting to take advantage of holiday lets need to be wary of new rules coming into force in April 2023.
From then holiday lets will need to be rented for a minimum of 70 days a year and available to be rented out for 140 days a year for investors to qualify for business rates.
Rachel Springall, finance expert at Moneyfacts.co.uk, said: “As the desire for a UK vacation rose due to the pandemic, the prospect of earning some extra income through a holiday let has spurred borrowers into action and lenders are catering for this demand.
“There are now more than 200 options available for borrowers comparing buy-to-let deals designed for holiday let, and 27 lenders are on board, many of which are building societies. While the rise in choice is positive, the market is still relatively niche but could grow further with demand.”
More investors are using holiday let every year.
Separate research from Hodge revealed a rise in holiday-let mortgage applications of 173% in 2021 compared to 2020.
Springall added: “If the demand for a UK holiday in 2022 lessens, consumers may still get a reasonable return on any investment, but it’s vital for them to ensure they are offering a let during a bustling season so they do not miss out on a demand spike.
“There may also be the need to fund upfront costs to get a property at a high standard to let, to entice a larger clientele and to stand above the competition. Should this be the case, borrowers will need to think carefully about what can make them a unique booking, and this will often depend on their location and the time of year.”