Leeds Building Society trials ban new holiday mortgages in tourist hotspots

Leeds Building Society, a leading UK lender, has launched a pilot initiative to suspend new mortgages for holiday lets in selected popular tourist destinations, aiming to address campaigners' concerns about the availability of housing in the affected areas.

The move comes in response to mounting pressure regarding the rise in short-term vacation rentals, which critics say have helped price local residents out of their communities. The rise in the number of properties being converted into holiday rentals, facilitated by platforms such as Airbnb, has exacerbated housing affordability issues, particularly in regions such as Norfolk and Yorkshire.

This development coincides with the recent unveiling of new government rules targeting short-term holiday rentals in England, signaling a wider effort to regulate a sector seen by some as 'out of control'. Under the proposed rules, future short-term rentals will require planning permission, and a mandatory national register will be set up to provide local authorities with comprehensive data on short-term rental properties.

Leeds Building Society, in partnership with North Norfolk District Council and North Yorkshire Council, will run a 12-month trial from the end of March. This trial will see a temporary freeze on new mortgage lending for holiday rentals in designated areas, with the aim of curbing further expansion of the holiday rental market.

The affected regions include popular coastal towns such as Cromer, Wells-next-the-Sea and Sheringham in North Norfolk, as well as Scarborough, Whitby, Filey, Saltburn, Leyburn and Richmond in North Yorkshire. Postcodes corresponding to these areas will be flagged within the building society's systems to prevent the approval of new mortgage applications during the trial period, while existing borrowers remain unaffected.

Holiday let mortgages, unlike traditional buy-to-let schemes, are aimed at properties intended for short-term rental rather than long-term residence. While Leeds Building Society ranks among the top 10 lenders offering such mortgages, it is notable that some lenders are including holiday mortgages in their buy-to-let loan portfolios.

Ben Twomey, managing director of Generation Rent, praised Leeds Building Society's initiative and highlighted the prioritization of housing needs over leisure activities. This move underlines a growing recognition of the need to balance the demands of the vacation rental market with maintaining local housing affordability and community integrity.

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