Holiday Let Mortgages After the End of the FHL Tax Regime

Holiday lets used to have their own tax regime. That ended in April 2025, and holiday let owners are now taxed much like ordinary landlords. The mortgages still exist and lenders remain active, but the investment case has changed, so the numbers need a fresh look.

What ended with the FHL regime

The furnished holiday lettings (FHL) rules were abolished from 6 April 2025 for income tax (1 April 2025 for corporation tax). For individual owners, that means:

• Mortgage interest relief is restricted to a basic-rate tax credit, the same Section 24 rule that applies to other landlords. • Capital allowances are no longer available for new spending on furniture and equipment. • Capital gains reliefs such as Business Asset Disposal Relief no longer apply on sale. • Holiday let profits no longer count as relevant earnings for pension contributions.

From April 2027, holiday let profits held personally will also face the higher property income rates announced in the Budget on 28 October 2026: 24%, 44% or 49%.

How holiday let mortgages work

A holiday let mortgage is a specialist buy-to-let loan for property let on short stays rather than a standard tenancy. The key difference is how income is assessed.

• Seasonal income projection. Lenders usually ask a holiday letting agent or surveyor for weekly rates in low, mid and high season, then average them. • Rental cover. The projected income is tested at 125% to 145% of a stressed interest rate, like other buy-to-lets. • Deposit. Expect 25% or more as a typical minimum. • Personal use. Many lenders allow some family use, but limit it. • Location. Lenders favour established tourist areas with year-round demand.

Local rules to check

• Wales applies council tax premiums on second homes, set by each council, and a letting-days test for business rates. • Planning and registration. Some areas restrict new short-term lets, and England is preparing a national registration scheme: https://www.dynesourcer.co.uk/blog/complex-btl/short-term-let-rules-2026-planning-registration • Stamp duty. The 5% additional-property surcharge applies if you will own more than one home.

Is a holiday let still worth it

It can be, if the location supports strong occupancy and the property does not rely on tax reliefs that have now gone. Run conservative numbers: assume lower occupancy than the agent's best case, include cleaning, changeovers, platform fees and utilities, and model tax at the new rates. Some owners compare a holiday let against a standard single let or a limited company purchase before deciding.

Compare holiday let mortgages

Our broker team can help gather the income projection lenders need.

Compare holiday let mortgages in the complex BTL calculator. HMO, MUFB, MPOT, short-term let, holiday let and other specialist property types all use this same tool.

https://www.dynesourcer.co.uk/mortgages/complex-buy-to-let-mortgage-calculator

For standard single-let buy-to-let mortgages:

https://www.dynesourcer.co.uk/mortgages/buy-to-let-mortgage-calculator

FAQs

Can I get a holiday let mortgage as a first-time buyer

Rarely. Most lenders want you to own your own home first.

Can I use the property myself

Usually for a limited number of weeks a year, depending on the lender.

Can I switch between holiday letting and long-term letting

Some lenders allow it; check your mortgage terms first.

Do holiday lets need an EPC

If they are let for more than four months a year in total, generally yes. The proposed 2030 EPC rules for private rented homes are aimed at standard tenancies; check the final regulations for short-term lets.

Important information

Your property may be repossessed if you do not keep up repayments on your mortgage. Most buy-to-let mortgages are not regulated by the Financial Conduct Authority. Consumer buy-to-let mortgages, and mortgages where you or a close family member will live in the property, are regulated. Dynesourcer Ltd is an Introducing Appointed Representative of Dynamic Commercial Finance Ltd, which is authorised and regulated by the Financial Conduct Authority, FRN 946483. A broker fee may be payable on application; we will tell you the amount before you proceed. This article is general information, not personal advice or tax advice. Tax treatment depends on your individual circumstances and may change. Figures correct as at 29 October 2026.