Guide · 10 min read
The specialist holiday-let lender pool, AirDNA-style income evidencing, post-FHL-abolition tax position, and where in the UK the maths actually still works in 2026.
Written by Matt Lenzie · Published 19 May 2026
Advice from
Matt Lenzie · 25+ year career banker (Bank of Scotland, Lloyds Banking Group). £300m+ raised for property clients.
25+ year career banker (Bank of Scotland, Lloyds Banking Group). £300m+ raised for property clients.
The holiday let mortgage market in 2026 looks very different from 2022. The mortgage products are still there, around 12-15 lenders actively quote, but the tax tail that drove the holiday-let boom of 2018-2022 was abolished in April 2025, and the post-Covid Airbnb arbitrage has thinned in most established holiday-let markets. The result is a more disciplined market where holiday-let purchases need to work on the mortgage maths and the occupancy maths alone, without the tax sugar that used to make borderline deals viable.
This guide walks through what's actually changed, which lenders to look at, how the income is evidenced, where in the UK the maths still works, and how to think about a holiday let purchase or refinance in 2026.
The Furnished Holiday Lettings tax regime ended on 6 April 2025. Until then, qualifying holiday lets enjoyed materially better tax treatment than ordinary BTL: full mortgage interest deductibility (no Section 24), capital allowances on furnishings and integral features, CGT business asset disposal relief on sale, and the income counted as relevant earnings for pension contribution purposes. Around 127,000 properties were in the FHL regime at peak (2022 figures).
From April 2025, those four advantages all went. Holiday lets are now taxed as ordinary property businesses: Section 24 applies (mortgage interest restricted to a 20% basic-rate credit for personal-name owners), no special CGT relief, no capital allowances on the property itself (only on commercially-used elements). Limited-company holiday lets are taxed the same as limited-company BTL, interest fully deductible, corporation tax on the net.
What didn't change: the mortgage market. Lenders never priced products on FHL tax status; they priced products on the income stream and the property type. With the tax tail gone, the lender pool is unchanged, the products are unchanged, and the underwriting is unchanged. What changed is the borrower's incentive, a 40% taxpayer who previously netted £15k after tax from a holiday let now nets meaningfully less. Some marginal holiday-let purchases that worked in 2022 don't work in 2026.
Holiday let mortgages price 0.50-1.50% above the equivalent standard BTL product. In May 2026 that means indicative pay rates of:
| Product | 2-year fix | 5-year fix |
|---|---|---|
| Standard BTL · 75% LTV | 5.45-6.20% | 5.25-5.85% |
| Holiday let · 75% LTV | 6.25-7.20% | 5.95-6.85% |
| Holiday let · 70% LTV | 5.95-6.80% | 5.75-6.55% |
| Holiday let · 60% LTV | 5.65-6.45% | 5.45-6.20% |
The pricing premium reflects three things: smaller lender pool means less price competition; perceived income volatility (a poor summer can hit a holiday let harder than an AST hits a standard BTL); and the property type itself (rural / coastal / single-occupancy is less marketable on forced sale than a city flat).
Some lenders offer better pricing on 5-year fixes, Cumberland and Suffolk in particular have run aggressive 5-year-fix holiday let products through 2025-2026.
Standard BTL evidences income by reference to assured shorthold tenancy rent, usually a surveyor's "market rent" figure, or an actual signed AST. Holiday let income is messier: weekly rates that vary seasonally, occupancy that depends on the marketing channel, costs that include cleaning and management that an AST doesn't carry.
Lenders model holiday-let income in one of three ways, in declining order of preference:
Some lenders stress-test holiday-let income at a discount to the projection, typically 75-80% of stated expected income, to allow for void weeks, peak/shoulder/off-peak mix, and cost line items the borrower might forget. The stressed projection is then run through an ICR test (typically 125% for SPV, 145% for personal-name higher-rate) at a stressed interest rate (usually 5.5%, or pay rate on 5-year fix).
The UK holiday-let map has tightened. The 2018-2022 boom was driven by London-and-Home-Counties professionals buying coastal / rural second homes, leveraged with FHL tax breaks, on Airbnb arbitrage in markets that hadn't yet been saturated. By 2026, several factors have cooled the maths in some areas:
Where the maths still works in 2026 is generally:
For specific yield analysis on UK holiday-let locations see our city pages, several Tier-A locations carry holiday-let-specific occupancy and rate data alongside the standard BTL stats.
If you're considering a holiday let purchase or refinance in 2026, the realistic decision framework is:
For more on borrower structures see limited company SPV vs personal name BTL. For the broader lender landscape see the 100+ BTL lender panel decoded.
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