A leading building society is trialling a ban on new holiday-let mortgages in some popular tourist destinations.
Campaigners say the move by Leeds building society could improve the situation for local residents currently struggling to buy or rent in parts of Norfolk and Yorkshire that have seen a surge in the number of properties turned into holiday rentals.
The announcement comes days after the government unveiled new rules for short-term holiday lets in England that aim to rein in a sector that has been described by some as “out of control”.
In recent years there has been growing concern about the number of properties being let out on a short-term basis, leading to local people being priced out of their communities. Platforms such as Airbnb have made it easy to do this as a potentially lucrative side hustle, while the tax treatment is more favourable than it is for buy to let. On top of that, the coronavirus pandemic and cost of living crisis have increased demand for domestic holidays and short breaks.
On Monday the government said it had listened to campaigners and announced two proposals applying to England. Planning permission will be required for future short-term lets (this will not apply to existing ones), while a mandatory national register will be set up to provide local authorities with information on short-term lets in their area.
Now, Leeds building society says it believes it is the first holiday let mortgage lender to restrict new lending. It has worked with North Norfolk District Council and North Yorkshire Council to set up a 12-month trial from the end of March, during which it will stop new loans for holiday homes in certain areas.
Everywhere in North Norfolk will be included, including the seaside towns of Cromer, Wells-next-the-Sea and Sheringham. The areas in North Yorkshire affected are Scarborough, Whitby, Filey, Leyburn and Richmond.
The relevant postcodes will be added to the building society’s systems to prevent any holiday let mortgage applications received in those areas from being approved. Existing holiday let borrowers are unaffected.
The Leeds estimates it is in the top 10 of the 40 or so lenders offering this type of mortgage. However, some lenders include them with with buy-to-let home loans. Holiday let mortgages are typically used to buy properties that will be let out for short periods (no longer than 31 days) rather than used for long-term lettings, which is where buy-to-let mortgages usually come in.
Ben Twomey, the chief executive of Generation Rent, says it is pleased that Leeds building society is “prioritising the necessity of homes over the luxury of holidays”.
• This article was amended on 26 February 2024. An earlier version wrongly said that Saltburn was included in the new mortgage lender scheme.
