Financing Short-Term Lets

Written: 07.08.26

Short-term letting has become one of the most active corners of the property investment market and one of the most misunderstood. Holiday lets and serviced accommodation aren’t simply buy-to-lets with better photos. They sit on a different lender panel, follow different underwriting rules, and from 2026 onward, are subject to a genuinely new planning and registration framework. If you’re buying, converting, or refinancing a short-term let, here’s what’s changed and how to finance it properly.

What Counts as a Short-Term Let?

Broadly, three models fall under this umbrella:

• Holiday lets: a single self-contained property let to holidaymakers, typically on a nightly or weekly basis, often seasonal.
• Serviced accommodation: usually urban, let short-term to business travellers or tourists, often with hotel-style extras such as cleaning and check-in support.
• Airbnb-style lettings of an existing residential property: sometimes run alongside long-term letting, sometimes as the sole use.

The regulatory and lending treatment can differ depending on which of these you’re operating, and increasingly on how many nights a year the property is actually let.

What’s Changed: The New Planning and Registration Landscape

Two significant reforms are reshaping short-term letting in England.

A National Registration Scheme: England now has a mandatory registration scheme for short-term lets, introduced under powers in the Levelling Up and Regeneration Act 2023. Hosts must register each property with their local authority, submit safety compliance evidence, and display a registration number on listings. Major platforms are integrating registration checks, and operating without one risks fixed penalty notices and listing removal. Registration confirms a property is on the national register, it does not, on its own, confirm the use is lawful for planning purposes.

A New C5 Planning Use Class: Alongside registration, a dedicated planning use class. The proposed C5 has been created specifically for short-term lets, separating them from ordinary residential use (C3). Properties already operating commercially as short-term lets are generally expected to be “passported” into C5 automatically. Crucially, the introduction of C5 gives local authorities the power to designate Control Zones: areas typically under pressure from tourism or a shortage of long-term housing stock where the usual permitted development right to switch between C3 and C5 is removed, meaning full planning permission is required to start or continue short-term letting.

If you’re buying with a short-term letting strategy in mind, checking whether the property sits inside a Control Zone, has an Article 4 Direction removing permitted development rights, or is in a conservation area, is now a essential part of due diligence, not an afterthought once the purchase completes.

The 90-Day Rule (London and Elsewhere)

In London, whole-property short-term lets remain capped at 90 nights per year without planning permission, a longstanding rule that continues to sit alongside the new national framework. Outside London, thresholds vary by local authority, and the interaction between the 90-day style rules, Control Zones, and business rates eligibility (which generally requires a property to be available to let for at least 252 nights and actually let for at least 182 nights a year) makes this an area where getting professional planning advice before you commit is worth the fee.

Financing a Holiday Let or Serviced Accommodation Purchase

This is where short-term lets diverge most sharply from standard buy-to-let. Mainstream BTL lenders typically won’t touch holiday lets or serviced accommodation at all as the income is seasonal, harder to verify, and the properties often carry furniture, hot tubs, or shared amenity blocks that don’t fit standard valuation models. This is a specialist, and much smaller, lender panel.

How Lenders Assess Holiday Let Income

Rather than using actual or achievable rent (as with standard BTL), holiday let lenders typically base affordability on projected gross rental income, using an independent letting agent’s projection of achievable nightly and weekly rates across the year, seasonally adjusted. Stress testing is usually applied to a blended average rather than peak-season figures, and lenders will want to see realistic occupancy assumptions rather than best-case marketing numbers.

Deposit and Rate Expectations

Deposits for holiday let mortgages typically start higher than standard BTL, commonly from 25%, sometimes more for serviced accommodation or properties with limited trading history. Rates and fees also tend to run higher, reflecting the smaller lender pool and the higher perceived income volatility.

Serviced Accommodation and Semi-Commercial Treatment

Larger serviced accommodation operations, particularly where a property has been converted into multiple self-contained units, or where trading income resembles a hospitality business more than a straightforward letting, may fall into semi-commercial or commercial lending territory instead. This changes the lender panel again, and often the underwriting approach, moving towards trading-business assessment rather than simple rental yield.

Funding a Conversion: Bridging and Refurbishment Finance

Converting an existing residential or commercial property into a holiday let or serviced accommodation unit such as reconfiguring layouts, adding en-suites, fitting out to a hospitality standard, is rarely something a standard mortgage will fund mid-project. Refurbishment bridging finance is the usual route: short-term funding to cover the purchase and works, with the exit being a refinance onto a specialist holiday let or serviced accommodation mortgage once the property is trading and has a track record (or at least a credible income projection) to support it.

Raising Capital Against an Existing Holiday Let

For landlords already operating a holiday let who want to release equity, to fund another purchase, cover a Section 24-style tax hit, or complete improvement works, a remortgage or further advance against the existing property is usually more straightforward than for a first purchase, since the lender has actual trading history to assess rather than a projection.

Licensing: Don’t Confuse It With Registration

Registration under the national scheme and planning permission are two separate obligations, and neither replaces the other. Depending on location and property type, additional licensing may also apply, food hygiene registration if breakfast or meals are provided, fire safety certification, and in Scotland, a full short-term let licence has been mandatory since October 2022, with some areas designating entire cities as control areas. Wales is rolling out its own registration and visitor levy framework on a similar timeline. Treat England, Scotland, Wales and Northern Ireland as genuinely separate regulatory regimes rather than variations on a theme.

Getting the Finance Right From the Start

Because holiday let and serviced accommodation lending sits on a distinct panel, the biggest mistake landlords make is assuming their usual BTL broker relationship, or a mainstream high-street lender, will simply flex to cover it. Getting a specialist packager or broker involved early, ideally before an offer is made, means income projections, planning status, and exit strategy are all aligned before you’re under a completion deadline.

Frequently Asked Questions

Can I get a standard buy-to-let mortgage for a holiday let? Generally no. Most mainstream BTL lenders exclude holiday lets and serviced accommodation from their criteria because the income is seasonal and harder to underwrite. You’ll need a specialist holiday let lender, typically accessed through a broker or packager with access to that panel.

How much deposit do I need for a holiday let mortgage? Expect to need at least 25% deposit, sometimes more for serviced accommodation or properties without an established trading history. This is generally higher than standard buy-to-let deposit requirements.

Do I need planning permission to run a short-term let? It depends on the property, location, and how it’s already used. A new C5 planning use class now exists specifically for short-term lets, and local authorities can designate Control Zones removing permitted development rights, meaning full planning permission is required. Always check the property’s planning status and any Article 4 Direction before committing to a purchase.

Is registering my short-term let the same as getting planning permission? No. England’s national registration scheme confirms a property is listed on the government register and has met safety compliance requirements, it does not confirm the use is lawful under planning law. You can be registered and still face planning enforcement action if the use itself hasn’t been properly authorised.

What happens if I don’t register my short-term let? Unregistered hosts risk fixed penalty notices and can have listings removed by platforms that check registration numbers as part of the national scheme’s integration.

Can I fund a conversion to a holiday let with a normal mortgage? Not usually while works are ongoing. Refurbishment bridging finance is the typical route for the purchase and conversion, with a refinance onto a specialist holiday let or serviced accommodation mortgage once the property is complete and has income to evidence.

How do lenders calculate affordability for holiday lets? Most base it on a projected gross rental income from an independent letting agent, seasonally adjusted across the year, rather than the achievable rent figures used for standard buy-to-let stress tests.

Are the rules the same across the UK? No. Scotland has had mandatory short-term let licensing since October 2022. Wales is introducing its own registration and visitor levy scheme. England’s framework, national registration plus the new C5 planning use class, is separate again, and Northern Ireland has its own certification requirements. Treat each nation’s rules independently.

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