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Leeds Building Society reduces Holiday Let lending

Journalist: Justin Moy, Contributing Editor

ended 28. March 2024

Leeds Building Society has today started to roll out its previously announced partial withdrawal from the Holiday Let market, allowing the lender to concentrate on other borrowers such as first-time buyers. This will be in collaboration with the change in taxation for Holiday Let landlords recently communicated in the Spring Budget. Initially, some postcode areas will be affected in North Norfolk and North Yorkshire. This is to help balance the availability of property to local people and a wider opportunity for councils to restrict investors in certain areas in the future.

Newspage asked brokers for their views on this change of policy by Leeds, if other lenders will look to reduce or even leave the Holiday Let market, and whether the UK Holiday Let market is now beyond its peak given the renewed popularity of overseas holidays?

7 responses from the Newspage community

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Editor
Justin Moy
Managing Director at EHF Mortgages
Leeds Building Society has been a major lender in this sector for many years, so the Spring Budget and the proposed increase in taxation on profits probably accelerated their partial withdrawal from the market. Also, much has been said about the impact of local people not being able to buy locally in many parts of coastal UK. Norfolk and Yorkshire have probably reached saturation anyway, so that's an easy starting point, but with the popularity of Holiday lettings on the wane, it will be interesting to see if landlords look to offload these properties and prices fall naturally, giving balance to these affected places.
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Ben Perks
Managing Director at Orchard Financial Advisers
Leeds are loosening their grip on the Holiday Let space. They’ve been a major player and a lender of choice when it comes to Holiday Lets for many years, so it’s surprising to see them pulling out in certain areas. They're obviously taking an ethical look at areas where locals are struggling to buy, so I’d imagine they’ll roll this out in other areas in the near future, too. Will another lender step up to fill this void or is demand for Holiday Lets dropping since the Spring Budget?
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Michelle Lawson
Director at Lawson Financial
Saturated demand and freeing up property for locals to buy in holiday areas isn't surprising from one of the leading holiday let lenders and I think more lenders will possibly follow. Taxation on holiday lets was brought in line in the Budget so for lenders to match this with their lending appetite makes sense. There will still be enough to go round and it should be noted that holiday lets already have a limited lender bank in comparison to other types of mortgage.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
This is what happens when banks, financial institutions and building societies stop being what they are, and start taking the role of social and moral police. Who has given Leeds Building Society the mantle of being the social justice crusader that help resolve the housing crisis? If you are a bank or building society, just do your job and lend to customers. Don't shove your silly ESG targets into customers' faces. Time and time again, businesses that have played hollow virtue signalling games have fallen flat on their faces. Anyone remember what happened to Budweiser? If Leeds are so concerned about the housing shortage, why not set up a foundation and invest in social housing in North Norfolk and North Yorkshire? I am sure the councils would be delighted with it.
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Robert Timm
Managing Director at Sunland Mortgages
Leeds Building Society have always been a major player in both the Shared Ownership space, which is a scheme designed to help buyers onto the ladder when they cannot afford full ownership, and the Holiday Let space. There's a big argument that the increase in holiday lets have meant more and more people can't afford to get on the ladder in the first place, so Leeds are probably taking an ethical position here.
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Akhil Mair
Director at Our Mortgage Broker
This shift in focus towards first-time buyers aligns with broader changes in the mortgage industry and reflects lenders response to recent changes in taxation for holiday let landlords. While this may initially affect borrowing options for some people, it's essential to understand that alternative solutions are available. I anticipate that other lenders will also review their lending appetite in the days ahead, once they've had time to digest the easter eggs.
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Gary Bush
Financial Adviser at MortgageShop.com
HMRC has killed off yet another part of landlords' much-needed incomes as their tax changes for holiday lets have forced the hand of lender Leeds Building Society to wind down funding for these borrowers. With the letting of homes having been more or less privatised by the government and UK councils, it's surprising that so much effort to tax these investors to death has been the focus for the past 10 years. They appear literally hell-bent on killing off short-term and long-term lets. Let's hope councils are ready to start buying up the property stock and being the landlord again.