The value of properties in tourist hotspots has received a boost from mortgage lenders, with the number of holiday-let mortgage products rising by nearly a quarter (23%) on last year.

Options for borrowers looking at holiday lets have increased to 445 options, up from 362 in August 2023, according to Moneyfactscompare.

There are currently 34 different lenders in this market, two more than a year ago, with the majority being building societies.

However, challenges lie ahead for those with a holiday rental, warns Moneyfactscompare, with the tax advantages for furnished holiday lettings likely to be abolished from April 2025 and an HMRC crackdown also announced.

“The buy-to-let market has undergone its fair share of upheaval over the past few years, with rising interest rates and tax perks quashed,” said Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

Tax challenges ahead

“However, a small part of this market has flourished over the past couple of years, with the availability of deals rising. There has also been an encouraging increase in the number of lenders prepared to cater to these types of landlords.”

“Holiday let owners will be facing challenges ahead, as from April 2025 there will be significant tax changes taking place. These changes will no doubt come as a blow to both existing and prospective landlords, but the demand and profitability of a holiday let could still be worth weighing up.

“It would be wise for new investors to do their research and pick a property to let with their head, not their heart, and getting advice from a listings service is also wise, to explore seasonal dips.”