Leeds Building Society to limit mortgage lending on holiday lets in hotspots
Leeds Building Society is set to limit lending for holiday homes in certain popular tourist areas in England.
The society's chief executive explained that holiday lets are limiting the number of homes available for locals in some places. Leeds Building Society has teamed up with North Norfolk District Council and North Yorkshire Council for a year-long trial where it will stop new loans for holiday homes.
This change will start at the end of March. The society will also include new mortgages for short-term lets, like Airbnb properties, as they consider them as holiday lets.
This move follows their 2022 decision to stop funding second home purchases, allowing them to focus more on first-time buyers. The two local councils have identified the areas where housing pressures are highest.
The society will add these postcodes to its system to stop approving holiday let mortgage applications from those areas. Current holiday let borrowers won't be affected. Areas in North Yorkshire including Scarborough, Whitby, Filey, Saltburn, Leyburn and Richmond will be impacted.
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The entire area of North Norfolk District Council, which includes Cromer, Wells-next-the-Sea and Sheringham, will also be included. Richard Fearon, the boss of Leeds Building Society, shared: "In some areas, holiday lets have grown to have a significant stranglehold on the pipeline of homes available for local people to live in and we want to play our part in removing it."
He also said: "We will learn through the trial how effective this measure can be in increasing supply of residential homes and gain greater insight on steps that can make a positive difference."
Councillor Wendy Fredericks, who looks after housing at North Norfolk District Council, mentioned: "In North Norfolk we have a really severe shortage of homes that people on local wages can afford."
She added: "Increasing numbers of holiday lets reduce the number of rental homes available for year-round use by local people. So I welcome the move by Leeds Building Society to stop new lending on holiday lets in key areas."
Councillor Simon Myers from North Yorkshire Council said: "We are pleased to support this initiative by Leeds Building Society. We welcome the fact that it is being specifically targeted at those locations where there are high concentrations of holiday lets."
He also noted: "At the same time we feel it strikes a fair balance between the housing needs of local people and the importance of the wider tourism economy of North Yorkshire."
Ben Twomey, chief executive of Generation Rent, said: "Generation Rent is pleased that Leeds Building Society is acting on this issue and prioritising the necessity of homes over the luxury of holidays. This trial to restrict mortgage lending on holiday lets is a forward-thinking step that will hopefully help to improve the situation for renters in North Norfolk and North Yorkshire."
Earlier this week, Secretary of State for Levelling Up, Housing and Communities Michael Gove outlined proposals to require planning permission for short-term lets to prevent a "hollowing out" of communities..
The new law would mean people who want to rent out their property as a short-term holiday home would have to ask the local council for permission under a new "use" category. The rules wouldn't apply to people who rent out their main home for 90 days or less in a year. A compulsory national list would be made to give councils information on short-term lets in their area.
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