How to get AirBnB buy to let mortgage finance

26-April-2022 13:33
in Mortgage
by Jennifer Stevenson

The AirBnB market is continuing to grow throughout the UK, with coastal and city-centre properties remaining in high demand for holiday makers and weekend city breakers.

But while some AirBnB properties are just spare rooms or annexes within a main home, more and more people in the UK are looking for buy to let mortgage finance to purchase a property solely for AirBnB rental.

In this guide, we look at how much you could earn via AirBnB renting, and how you can go about securing a buy to let mortgage to purchase an AirBnB property.

Most people don’t realise the range of finance now available for purchasing an AirBnb property with a mortgage – lenders are becoming more and more lenient in providing finance for short term, holiday let style properties as opposed to just AST rentals (Assured Shorthold Tenancy) that are rented for at least 6 months at a time.

In this guide

How much can you earn via AirBnB?
Mortgage constraints on homeowner Airbnb hosts
Previous BTL mortgage restrictions on Airbnb lets
New mortgage products for Airbnb portfolios
How can a mortgage broker help?

Airbnb apartment purchased by landlord

How much can you earn via AirBnB?

It of course depends on your property type and location, and the number of rooms you’re able to rent out, but AirBnB provide a useful example calculator on their website for a few top locations.

Taking central London as an example, hosting an entire property for 4 guests could earn you up to £3,729 per month based on the local area and current demand.

A property in this location obviously won’t come cheap, but the desirable area means rental demand won’t be a worry, making your property more attractive from an investment perspective and from a mortgage lender’s viewpoint.

Reliability of regular guests will be factored in by underwriters when you apply for your AirBnB buy to let mortgage, so you should think about this when choosing your property.

The best way to estimate what kind of rental yield you’ll get from your AirBnB property is by looking at what’s already on the market in your area on the website.

While you’ll need to take into account that you may not be able to rent out your property for every single week of the year, you could well find that you’ll earn more with multiple short term holiday guests than with one, long term rental contract.

Related: NEWS: The Fastest Growing Property Price Locations in the UK

AirBnB Mortgage Case Study

Mortgage constraints on homeowner Airbnb hosts

Mortgage lenders also require that their consent is sought for Airbnb tenancies.

  • Lenders who consider it to be using a property for commercial purposes may refuse, including Barclays, HSBC, Nationwide and Yorkshire Building Society.
  • Other lenders may grant a “consent to let” – if the borrower can prove that they had no plans to let out this property when they bought it. They will usually require that a new mortgage is set up, at BTL rates.

New Airbnb-friendly residential mortgage products being introduced may provide a work-around for part-time landlord homeowners.

But, like professional landlords, they may come under pressure from neighbours in residential areas who are unhappy with short-term, party-minded tenants arriving and leaving at all hours (and clattering their wheelie luggage along the pavements).

Airbnb app for landlords

Previous BTL mortgage restrictions on Airbnb lets

Many traditional lenders have viewed Airbnb-style letting as a much riskier option than AST lets, or traditional holiday lets. The cash-flow from short-term letting can be highly seasonal, and much less predictable compared with fixed rental agreements for one or two years.

As a result, lenders have only been willing to stress borrowing affordability on conventional AST returns. 

New mortgage products for Airbnb portfolios

Alternative finance providers are now stepping in to help fill the funding gap, giving landlords the opportunity to diversify their portfolios with some choice high-return properties in sought-after holiday locations.

For example, loans of up to £2M are now available from a specialist lender for purchase or remortgage of short-term letting properties, with loan-to-value starting at 65%.

Related: How to get a Holiday Let Mortgage

Landlord Airbnb living room

Contact Clifton Private Finance

On rental properties offering this range of returns, the cost of your finance will be a critical factor. We can source lending across the market, including broker-only private lenders, and find you the most cost-effective solution. Contact us to arrange a convenient time to discuss what you need to finance a holiday rental property:

0117 959 5094 

More about buy to let mortgages

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