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Underwriter insights: Rob Ford talks Holiday Let  

Rob Ford
21st March 2024

Here Rob Ford, head of mortgage origination at Hodge, uncovers the different approaches underwriters are taking to ensure the support currently in place for borrowers continues. 

1. The holiday let market has seen significant changes recently, can you describe its journey? 

Absolutely, it's been quite the rollercoaster ride. It was smooth sailing until the pandemic hit and we all went staycation mad, and demand went through the roof.  

Things have stabilised somewhat, but the market faces other challenges such as localised concerns about the density of holiday lets in certain areas. And of course, we recently saw the Chancellor announce the abolition of business rate relief for furnished holiday lets in the Spring budget.   

2. With these changes, how is the market adjusting? 

That's where the innovative spirit of underwriting comes into play. Holiday let underwriting has always been a step away from the norm, even compared to other specialist and complex income products.  

With affordability based on the property itself rather than the personal income of the applicant (and with no minimum personal income requirement at all), it’s common to see larger loan sizes secured on properties that are more often than not hugely characterful and/or situated in unusual or remote locations.  

With a degree of scrutiny on the holiday let market, and the housing market as a whole, it's important that investors, brokers and lenders keep up to date with developments and work together to ensure good quality holiday let business remains an attractive proposition. 

3. How important is the location of a holiday let in today's market? 

Interestingly, location is becoming less of a decisive factor. At Hodge, we’ve continued to receive a balanced mix of applications for properties in city, coastal and rural areas in recent years, likely reflective of the many different ways in which UK consumers now use Holiday Lets for both work and leisure nowadays.  

4. How are you supporting holiday let owners in adapting to the market's legislative changes? 

We're going the extra mile by offering more flexible usage terms than many other lenders, such as allowing Airbnb use. We're also streamlining the application process, emphasising a 'yes-first' approach to underwriting, which really helps in keeping things smooth and supportive for our borrowers. 

We want borrowers to continue to feel confident and secure in the commitment they’re making. One of the ways we can do this is by enhancing the criteria on our Holiday Let products to accommodate debt consolidation and larger loan sizes, while leaning on the expertise of our own in-house property team to provide further insight and feedback too.  

5. How do you ensure affordability in such a fluctuating market? 

We conduct our affordability assessments based on a 30-week period, providing a comfortable cushion for owners. Plus, we're always keeping an eye on the regulatory landscape to ensure our products meet our investors' needs responsibly, helping them stay ahead in a changing market. 

6. With all these changes, what remains attractive about the holiday let market? 

Despite the challenges, the holiday let market's appeal hasn't waned. The UK remains a favoured destination, offering the potential for solid returns on short-term rentals. With the right tools and flexibility, owners can still find their own piece of bliss in a holiday home, successfully tapping into the enduring demand for local holiday experiences. 

If you’re looking for how to deliver the best outcomes for your clients in the changing holiday let marketplace, contact one of our BDMs today.

Find out more about Hodge Holiday Let mortgages.

Rob Ford
21st March 2024

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