If you’re anything like me, Easter, the recent swathe of bank holiday weekends, and a sustained period of sunshine have certainly got me thinking more and more about upcoming holiday plans and the potential of packing up the car for a last-minute break.
Alongside the ongoing demand for ‘staycations’ experienced in recent times, there is also a strong overseas appetite to visit the UK. Provisional data released in February from Visit Britain suggests that there were an estimated 19.5m inbound visits to Great Britain in the first half of 2024, up 4% vs 2019 and up 11% vs 2023. Over the first 6 months of the year, visitors spent £13.4bn, up 15% vs 2019 and down 1% vs 2023 with nights spent totalling 134.8m over the first half of the year up 12% vs 2019 and up 5% vs 2023.
This data highlights the appeal of our shores to both domestic and overseas visitors, which undoubtedly continues to inspire thoughts of owning a holiday home. The resilience of the UK property market also makes it an attractive investment, with potential for capital appreciation and rental income when not in use. This combination, alongside a number of other factors, have resulted in us experiencing a noticeable increase in holiday let enquiries in recent months.
A number of these enquiries have come from an expat community who appear to be viewing this market with increased scrutiny and desire. Owning a holiday home in the UK offers expats a convenient, flexible retreat or even a familiar base close to family and friends, allowing for spontaneous visits or extended stays. Although, depending on how this purchase is funded, there may be some limitations on the length of time spent at the property.
OPTIONS FOR EXPATS
While many lenders may hesitate in offering holiday let products to expats due to perceived risk or complexity, there are specialist options available that cater to this market and tend to adopt a more nuanced approach instead of relying solely on standard interest coverage ratios (ICR).
Specialist expat holiday let products typically have clear criteria to ensure suitability and sustainability. For example, our expat holiday let product is available exclusively to individual landlords, with a maximum limit of three buy-to-let mortgaged properties. Properties must qualify as a Furnished Holiday Let under HMRC definitions and be available for letting for 140 or more days each year. Airbnb arrangements may also be considered, provided the properties are managed through holiday let agents.
Applicants must maintain their own main residence and demonstrate a minimum income of £30,000. Only properties located by the coast or within national parks are eligible, while properties on holiday parks, complexes, bed and breakfasts, flats, leasehold properties, or those with occupancy restrictions are not accepted.
Income assessment requires a letter from a holiday let agent on company letterhead, confirming the average low, medium, and high rental income, expected occupancy, and associated fees. This approach provides a realistic view of earning potential, reducing the risks of underestimation often associated with letting agent forecasts.
As with most niche product types, each lender will have its own unique approach, with criteria varying accordingly. This highlights the importance of a strong relationship between lenders and advisers in ensuring the best outcomes for different client types.
Looking ahead, advisers have a clear opportunity to showcase their expertise to expat clients by highlighting products that are not widely available. Mastering the subtleties of expat lending and understanding the individual criteria requirements of lenders can position brokers as go-to experts in this market. With the right support, expat clients can secure their ideal UK holiday retreat, while brokers strengthen their reputation and expand their client base.
