The number of holiday-let mortgages has risen but would-be borrowers are being warned to beware of tax changes, which are on the horizon.

New data from Moneyfactscompare.co.uk revealed the number of mortgage deals available to those who want to borrow money to buy a holiday home to let have increased from 362 to 445 options since August 2023.

There are 34 lenders which now offer holiday-let mortgages and the majority, said Moneyfacts, are building societies.

But anyone who has felt inspired by the UK holiday letting market this summer and is considering an investment of this kind should be aware of challenges which lay ahead.

Moneyfacts is warning, from April 2025, the tax advantages for furnished holiday lettings will be abolished.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, explained the changes were designed to promote fairness and align tax rules for furnished holiday lettings with those for other property businesses.

“To mitigate tax liabilities,” she said, “it is essential consumers seek advice to go through how the abolition of the furnished holiday let tax regime will impact them.

“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.”

If you are not put off by these changes, you are advised to make sure you do your research on where to buy and what sort of lettings you might be able to accommodate.

You can find out more about popular holiday-let locations here.