A prominent building society, Leeds Building Society, is conducting a trial that involves temporarily halting new holiday-let mortgages in specific popular tourist destinations. This move is seen as a potential improvement for local residents in parts of Norfolk and Yorkshire who are currently facing challenges in purchasing or renting properties due to an influx of holiday rentals.
The decision by Leeds Building Society aligns with recent government efforts to regulate the short-term holiday let sector in England, which has been criticized as “out of control.” The rise of properties being offered as short-term rentals, facilitated by platforms like Airbnb, has led to concerns about local residents being priced out of their own communities. The tax advantages and increased demand for domestic holidays amid the COVID-19 pandemic have further fueled this trend.
The UK government, in response to such concerns, recently introduced two proposals for England. Planning permission will be required for future short-term lets (excluding existing ones), and a mandatory national register will be established to provide local authorities with information on short-term lets in their respective areas.
Leeds Building Society’s initiative marks an attempt to address these issues at the lending level. The society is working with North Norfolk District Council and North Yorkshire Council to implement a 12-month trial starting at the end of March. During this period, new loans for holiday homes in specific areas will be temporarily halted. Notably, existing borrowers with holiday let mortgages will not be affected.
The areas included in the trial cover North Norfolk, encompassing seaside towns like Cromer, Wells-next-the-Sea, and Sheringham, as well as North Yorkshire areas such as Scarborough, Whitby, Filey, Saltburn, Leyburn, and Richmond. The building society plans to add relevant postcodes to its systems to prevent approval of new holiday let mortgage applications in these areas.
Leeds Building Society estimates that it ranks among the top 10 out of approximately 40 lenders offering holiday let mortgages. While some lenders categorize these mortgages with buy-to-let home loans, holiday let mortgages are generally used for properties rented out for short periods (up to 31 days), distinguishing them from buy-to-let mortgages used for longer-term rentals.
Ben Twomey, the Chief Executive of Generation Rent, expressed satisfaction with Leeds Building Society’s decision, commending the prioritization of housing necessities over the luxury of holiday properties.
