Holiday let mortgages in 2026: what lenders ask for, and what changed on tax

Quick answer: Leeds, Cumberland and Principality Building Societies lend up to 75% of a holiday let's value and Furness up to 80%, so a deposit of at least 20% to 25% at these lenders. The expected holiday rent must cover the loan by 125% to 170%, with Leeds, Cumberland and Principality testing at a rate of 5.5% or more, according to criteria they published in 2026. Since April 2025, HMRC taxes holiday lets like other rental property.

Guestwise is a short-let management company, not a mortgage broker or lender, and this page is not mortgage advice. This page sets out what lenders, HMRC and the FCA publish, with a link to each source. Criteria and rates change often, so check with the lender or a broker before you apply.

Which type of mortgage do lenders offer for each situation?

What do lenders ask for? Five lenders compared

These are the published holiday let criteria of five UK lenders, read on each lender's own site in October 2026. Most are written for brokers, which is why the wording is technical.

On a phone, swipe the table sideways to see all nine columns.

"Rental cover" means the expected rent divided by the interest at the stress rate. A 145% test means £145 of rent for every £100 of interest.

How much can you borrow on a holiday let?

The lenders below start from the expected rent, not the purchase price. Leeds Building Society asks a letting agent for high, mid and low season weekly rates, averages the three and multiplies by 30 weeks, then requires that rent to cover the interest by 170% (Leeds lending criteria). Principality uses the same 30-week average with a 145% test, and its own worked example uses weekly rates of £700, £500 and £300 (Principality).

Using those example rates from Principality, the 30-week rent is £15,000 a year. At 145% cover and a 5.5% stress rate, the largest interest-only loan that passes the test is about £188,000. Principality's own example uses a 2-year fix stressed at 8%, which gives a maximum loan of £129,310 from the same rents (Principality). The stress rate makes a large difference, so the calculator below lets you try both.

What are holiday let mortgage rates in 2026?

Leeds Building Society listed these holiday let fixed rates on 21 September 2026 (Leeds Building Society):

Across the market, the most recent figures from Moneyfacts, published in August 2024, counted 445 holiday let mortgage deals from 34 lenders, with an average fixed rate of 6.20% (Moneyfacts). In August 2020 Moneyfacts counted 74 holiday let deals (Moneyfacts, January 2023).

Holiday let or buy-to-let mortgage for a holiday home?

The difference is how the rent is assessed. Leeds and Principality Building Societies base a holiday let mortgage on seasonal weekly rates over 30 weeks from a letting agent's projection (Principality). A buy-to-let mortgage is based on rent from a tenancy. Since April 2025 HMRC taxes holiday lets in the same way as long lets (HMRC), so the choice now depends on how the property will be let rather than on tax.

What changed on holiday let tax in April 2025?

HMRC abolished the furnished holiday lettings tax regime from 6 April 2025 for income tax and capital gains tax, and from 1 April 2025 for corporation tax (HMRC policy paper). According to HMRC:

• Individuals now get relief on mortgage interest at the 20% basic rate only, the same as long-let landlords. HMRC says companies are not subject to this restriction (HMRC clarification).
• Holiday let income is now treated like other property income across the UK.
• HMRC says Business Asset Disposal Relief, rollover relief and gift relief are generally no longer available for holiday lets from 6 April 2025, with limited exceptions such as a business that actually stopped before that date (HMRC CG73505).
• New spending on furniture and equipment no longer qualifies for capital allowances. Replacement of Domestic Items Relief applies instead.
• VAT, council tax and business rates were not changed by the abolition.

Our guide to how short-let income is taxed covers this in more detail.

Is a holiday let mortgage regulated?

The FCA's guidance on buy-to-let lending defines consumer buy-to-let as a buy-to-let agreement not entered into "wholly or predominantly for the purposes of a business" (FCA Handbook PERG 4.10B). The guidance does not mention holiday lets by name. Ask the lender or broker whether a product is regulated, because that decides which FCA mortgage rules apply.

Does it matter where the property is?

• England: GOV.UK says a national register for short lets is not yet in force and is now expected to begin in March 2027. Your local planning authority decides whether planning permission is needed (GOV.UK).
• Wales: to pay business rates rather than council tax, a self-catering property must be available to let for 252 days and actually let for 182 days in the last 12 months. From 1 April 2026 an average over 2 or 3 years can be used (Business Wales). Councils can charge a council tax premium of up to 300% on second homes (Welsh Government).
• Scotland: each short-let property needs its own licence before taking bookings (Scottish Government). The Scottish Government says that in a control area, letting a home that is not your main residence also needs planning permission (Scottish Government).

Lenders also limit where they lend. Principality lends in England and Wales only, and Leeds Building Society is not taking new holiday let lending in North Norfolk and parts of North Yorkshire, according to their criteria.

This is general information, not mortgage, financial or tax advice. Lender criteria and rates are as published on the dates shown and change often. Speak to an FCA-authorised mortgage broker and a tax adviser before you act.