As Leeds Building Society has officially stopped holiday let lending in parts of North Norfolk and North Yorkshire as part of a 12-month trial, some brokers have warned that more BTL lenders could potentially follow in the firm’s footsteps.
The building society announced its intentions to temporarily restrict mortgage lending on holiday lets in those areas at the end of February, with the trial having officially started yesterday (28th March).
“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,” said Richard Fearon, chief executive at Leeds Building Society.
“This is another example of how we’re putting homeownership within reach of more people generation after generation.
“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.”
Speaking to Newspage, Akhil Mair, director at Our Mortgage Broker, and Michelle Lawson, director at Lawson Financial, said other lenders would likely review their lending appetite for holiday lets in the days ahead — particularly following Jeremy Hunt’s plan to abolish the furnished holiday lets tax regime announced during this year’s Spring Budget.
"Saturated demand and freeing up property for locals to buy in holiday areas isn't surprising from one of the leading holiday let lenders, and I think more finance providers will possibly follow,” said Michelle.
“Taxation on holiday lets was brought in line in the Budget, so for lenders to match this with their lending appetite makes sense.”
Kundan Bhaduri, property developer and portfolio landlord at The Kushman Group, has criticised Leeds Building Society’s ethical decision to restrict lending in the two tourist hotspots.
"This is what happens when banks, financial institutions and building societies stop being what they are, and start taking the role of social and moral police,” he stated.
“Who has given Leeds Building Society the mantle of being the social justice crusader that help resolve the housing crisis? If you are a bank or building society, just do your job and lend to customers; don't shove your silly ESG targets into customers' faces.
“If Leeds Building Society is so concerned about the housing shortage, why not set up a foundation and invest in social housing in North Norfolk and North Yorkshire? I am sure the councils would be delighted with it."
