Mixed Use Holiday Lets
A holiday let is classed as mixed use where the owner lives in part of the property while renting out other parts and buildings for short term lets.
A very simple example would be a large house occupied by the owner with a self-contained annexe used for holiday letting and short stays.
What is a mixed use holiday let?
“Mixed use” is a bit of lender jargon and is commonly used for commercial properties. It means that a property is being used for two different purposes, at the same time.
Lender’s design their mortgages and interest rates based on a style of occupancy. This would be a residential mortgage for your own home and a buy to let mortgage for a property let out for the long term on an AST.
If you have a main property that is the owners private residence with other dwellings or buildings that are used for short term lets, that is a mix of residential use and commercial letting. Not all lenders are happy with this mixed usage scenario as it brings in added complications and potentially risk.
What is a multi-unit holiday let?
A multi-unit holiday let is something slightly different and refers to the fact that there is more than one building on the title that is used for letting.
But the owner does not live there.
It is possible for this to be a small purpose built block of flats or apartments. This structure is popular with experienced landlords within buy to let and are often referred to as a Multi-Unit Freehold Block, or MUFB.
Read more about multi-unit holiday lets
Can you have a mixed-use, multi-unit property?
Yes you can. There is an example below but often this will be a main residence with other cottages, barns or dwellings on the same plot and freehold title.
RECENT EXAMPLE
We helped a client acquire a 5 bedroom detached property in Wiltshire as a large family home. Included in the sale were three cottages which had consent for use as holiday lets. These were on the same plot of land but not too near the main house to cause any issues.
The clients were not looking for a property with extra outbuildings and indeed they did not need to generate any additional income beyond their personal earnings. But they wanted to buy the main house as it was the perfect home for their family.
All of the properties were freehold and noted on the one title at Land Registry.
Financing this was not completely straightforward, due to the holiday cottages, but a competitive mortgage at 70% loan to value was approved and the purchase went ahead.
The new owners decided to let out two of the cottages as high-end luxury holiday lets. Preferring to be choosy about who stays there and when. They hope that this unexpected extra income may allow them the opportunity to spend a little more time at home, rather than at work.
Not on the High Street!
The high street lenders can’t help every mortgage customer and they prefer the simple, low-risk ones.
If your situation is a bit different or needs a more personalised solution then our brokers can help.
Expert advice, for all situations.
Bridging Loans
The most flexible of secured loans and often misunderstood. Bridge loans can be used in so many different ways and can be arranged super fast.
Large Loans
High net worth mortgage brokers understand complex large loans and unique situations and can source bespoke deals from the right lenders.
Let to Buy
Let to buy combines a buy to let remortgage with a residential mortgage. Allowing you to move house while keeping your current home.
What finance is available for Mixed Use Holiday Lets?
The mixed-use finance needed for these types of properties is provided by commercial or specialist lenders who understand the short-term letting industry. It’s not something that a high street lender would want to lend against.
Unlike standard lenders, these specialists have flexible criteria and they will look at the overall picture of a borrower, their finances and the intended holiday let. Underwriting decisions will be done manually, with experienced staff (who have common sense and live in the real world).
How you intend letting or marketing the property will be relevant to the lender. Many owners will prefer to advertise and deal direct with guests while airbnb mortgages are also available.
Where the required loan exceeds £2 million it may be beneficial to approach a private lender or private bank who can offer bespoke underwriting and lending terms. Holiday lets are perfect for the more unusual property styles such as barn conversions, churches and even castles.
Mortgages are available to:
- Individuals
- Partnerships
- Trusts
- Limited companies
- Special Purpose Vehicles (SPV)
LOAN TO VALUE
75% LTV is achievable with most lenders
FIRST TIME INVESTOR
Yes, mortgages are available to first time investors
AIRBNB
Financing that includes Airbnb usage is available
LIMITED COMPANY
Mortgage applications from SPVs are acceptable
Getting the right advice
You probably already know what we are going to say here…
GET YOURSELF AN INDEPENDENT MORTGAGE BROKER
Mixed-use mortgages and loans are not readily available from the high street or from comparison websites. For the best outcome you should work with an independent mortgage broker, they will have access to over 100 lenders and many of these will be specialists.
The mortgages for mixed-use houses are often a cross between a holiday let mortgage and a commercial mortgage. There’s no set type or size, if a lender is interested they will devise a loan to help you.
MAKE SURE THEY ARE EXPERIENCED
Arranging finance for a mixed use holiday let is both rewarding and interesting. The properties are interesting and often have their own quirks and intricacies.
But the broker does need to have experience in this marketplace. So don’t be afraid to ask a few key questions at the first meeting or call.
