As landlords can charge higher rents for short-term holiday lets, it is tempting to convert buy to let property to a holiday let after a long-term tenant leaves. However, it is not a simple process and there are a number of things to consider.
The first point to check is that letting out the property as a holiday let does not contravene the conditions of a commercial mortgage being used to purchase the buy to let property. If a landlord breaches their mortgage terms, they could face a fine or even be asked to repay the whole mortgage. The landlord may need to take out a commercial mortgage suitable for holiday lets.
Administration of a holiday let is more complex. At the end of each let the property needs checking and cleaning.
The insurance cover a landlord takes out on the property and insurance to cover rent arrears will not be suitable for holiday lets so will need to be changed.
If the house is rented to five or more people then it may need a house of multiple occupancy licence.
Although converting buy to let property to a holiday let can be complex, it could make business sense. Unlike buy to lets, landlords of holiday lets can claim full tax relief on their commercial mortgage interest payments. They can also claim tax relief on furnishing the property for their holiday tenants. Landlords can charge a higher weekly rate than buy to let tenants.