Why are Furnished Holiday Let (FHL) mortgages gaining popularity in the UK?

Making better profits on investment is the ultimate goal of every business venture. Furnished Holiday Let mortgages have been steadily gaining popularity lately. In this article we look at why holiday let mortgages might be just the thing you’ve been looking for as a way of bringing in potentially better returns from your property investment.

What is FHL in the UK, and what it means to you.

As the term implies, ‘to let’ means to rent or lease out your property for a term with the intention of generating an income. A slight variation, and we’ve got ‘holiday let’ also known as Furnished Holiday Lettings (FHL for short), this type of accommodation is typically rented to tourists.

The more commonly known type of mortgage for businesses and income generation is buy-to-let. Buy to let and Holiday let may seem similar at the on-set, however just like any other mortgage scheme, they have their differences.

While a Buy to let mortgage is typically a long-term agreement between the landlord and the tenant, Furnished Holiday Let is a short-term rental, which is usually less than 31 days. The short-term rental can be seen as a positive indicator for the approval of a mortgage. Unlike Buy to Let, where long term agreements and returns are expected, Holiday Lets have the potential to generate money much faster with short term rentals. The quick returns are a positive indicator to a lender when you apply for a mortgage as a borrower.

Unlike many Buy to Lets, Furnished Holiday Let (FHL) is fully furnished accommodation. This allows you to charge more on the rental for such value-added benefits, which in turn means potentially higher income that can help you pay off your mortgage quicker.

Another definite advantage about having a Holiday Let is taxation. If your FHL meets the stipulated requirements, you could be eligible for tax benefits. In order to claim your tax benefits, you are required to carry out an analysis on the profit and loss from your Holiday Let before submitting them for taxation assessment.

With opportunity for better return on investment, Furnished Holiday Let mortgages has seen a marked rise in recent times.

 Getting a mortgage for a FHL.

As with many mortgages, you will ideally be able to borrow 75% LTV for the property you wish to purchase. This may change according to the income generation of your FHL. A lender may consider the average income generation based on the minimum that you expect to make on a monthly basis.  This average could also depend on seasonal tourist visitations. For example, a high yield during the high seasons, and vice versa during the low seasons. Something you may find as an added advantage when obtaining a mortgage for a FHL is,no minimum personal income statement is required.

Before making a decision on setting up a FHL, speak to a professional mortgage broker. Their recommendations can be invaluable and help you get the right deal on your mortgage.

Types of mortgages available in the UK for Holiday Lets

Business mortgages can be specialised and this could mean that your lenders might be limited by way of selection. However, just like when choosing a residential mortgage, you can choose from the types of mortgages available in the market, such as fixed rate, standard variable rate (SVR) and variable. Keep in mind though that this is a business-oriented mortgage. And business mortgages may carry a higher interest rate than a residential mortgage. Remember to check with your mortgage broker before deciding on the lender.

As in any mortgage, you will be required to carry out a down payment. This is usually 25% of the total value of the property. However, in a FHL mortgage, this rate could change. Again this is because it is a business investment that is geared for profit generation. Obtaining the right mortgage deal can be made simpler by working with an advice firm such as BVS Mortgages and Financial Services.


UK and London have seen a defined growth in business-oriented entities in recent times. Furnished Holiday Lets can produce positive returns on investment. While Buy to Let is also a popular mode of mortgage, FHLs are proving to be an easier business model for entrepreneurs. Lenders do favour FHL knowing that returns come in a shorter space of time unlike Buy to Lets which is typically rented out for a period of six to 12 months. If you’re seeking for a property-based venture in London or the UK, why not consider FHL as your next investment? 

Please note: Some buy to let and holiday let mortgages are not regulated by the Financial Conduct Authority.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.


* Approved by the Openwork Partnership on 31 August 2023