Building society restricts holiday let lending in tourist hotspots

Building society restricts holiday let lending in tourist hotspots

0:03 AM, 28th February 2024, About 4 months ago 3

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A building society has revealed that it has worked with North Norfolk District Council and North Yorkshire Council to launch a 12-month trial aimed at curbing lending for holiday let properties.

The move comes as housing pressures intensify in some regions, impacting local residents’ access to homes.

From today (March 28) Leeds building society will cease approving new loans for holiday let homes in designated postcode areas.

The decision follows the society’s move in 2022 when it became the first national lender to withdraw funding for second residential homes.

‘Putting homeownership within reach of more people’

The society’s chief executive, Richard Fearon, said: “This is another example of how we’re putting homeownership within reach of more people generation after generation.

“In some areas, holiday lets have grown to have a significant stranglehold on the pipeline of homes available for local people to live in and we want to play our part in removing it.”

He added: “There have been a range of measures introduced by government over recent years to give local areas additional powers to restrict holiday lets.

“This adds to their arsenal of options and does so in a way which leaves power in the hands of local communities.

“We will learn through the trial how effective this measure can be in increasing supply of residential homes and gain greater insight on steps that can make a positive difference.”

More than 73,000 holiday homes across Great Britain

The impact of holiday lets is particularly pronounced in some areas and Generation Rent says there are more than 73,000 holiday homes across Great Britain, with an annual increase of 7,000.

Notably, North Yorkshire is among the seven regions highlighted by the campaign group where holiday home growth has significantly reduced the supply of new homes.

Leeds BS says it wants to strike a fair balance between local housing needs and the economic benefits of tourism.

By restricting holiday let lending in targeted locations, the society hopes to contribute to increasing the overall supply of residential properties.

The society adds that existing holiday let borrowers remain unaffected by these changes.

‘Short-term holiday lets has seen renters turfed out of our homes’

Ben Twomey, the chief executive of Generation Rent, said: “The massive increase in short-term holiday lets has seen renters turfed out of our homes and priced out of our communities.

“Generation Rent is pleased that Leeds Building Society is acting on this issue and prioritising the necessity of homes over the luxury of holidays.”

He adds: “This trial to restrict mortgage lending on holiday lets is a forward-thinking step that will hopefully help to improve the situation for renters in North Norfolk and North Yorkshire.

“While the government must do more to stop the haemorrhaging of homes into the holiday let sector, Generation Rent are encouraged that lenders have identified the problem too.

“The more that can be done to stop rents rising and help tenants to stay in our communities, the better chance we will have to be in position to buy our own homes one day too.”

‘We have a really severe shortage of homes’

Cllr Wendy Fredericks, the portfolio holder for housing and people services at North Norfolk District Council, said: “In North Norfolk we have a really severe shortage of homes that people on local wages can afford.

“Increasing numbers of holiday lets reduce the number of rental homes available for year-round use by local people.

“So, I welcome the move by Leeds Building Society to stop new lending on holiday lets in key areas.”

Cllr Simon Myers, the executive member for culture, arts and housing at North Yorkshire Council, said: “We are pleased to support this initiative by Leeds Building Society.

“We welcome the fact that it is being specifically targeted at those locations where there are high concentrations of holiday lets.

“At the same time, we feel it strikes a fair balance between the housing needs of local people and the importance of the wider tourism economy of North Yorkshire.”

Allow Leeds BS to focus on supporting first-time buyers

The strategic shift in lending will allow Leeds BS to focus on supporting first-time buyers to enter the property market.

Research commissioned by the society highlights the formidable challenges faced by first-time buyers.

It says that house price-to-earnings ratio has doubled over the past four decades, making it nearly five times their earnings and saving for a deposit now takes an average of 12 years.


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Comments

Cider Drinker

0:45 AM, 28th February 2024, About 4 months ago

Seems like old news

SirAA

13:49 PM, 28th February 2024, About 4 months ago

Rather unfortunate to see a highly respected lender follow the path of self-serving politicians by tackling the unintended consequences of bad government policies rather encouraging them to tackle the root cause(s) of the problem.

Martin S

10:47 AM, 2nd March 2024, About 4 months ago

The truth is that wealthy people don't need mortgages, or as I have done, take money out of other properties, so as to buy a holiday home outright. This is doubly beneficial as you don't have to pay the higher mortgage rates required when buying a 'holiday' home.

As for building societies (banks in particular) taking a holier than though attitude on the subject, is in contrast to their swiftness to pass on high interest rates, which are an even bigger barrier to people owning their own first home.

As for being able to stay where you were brought up, isn't a God given right. Many of us had to move away from our home areas to find employment and somewhere to live, especially when younger. It's not a new situation.

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