Building society bans mortgages on holiday let properties

A building society has launched a pilot project banning mortgage lending on holiday lets in two tourist areas for 12 months.

Leeds Building Society will not lend on holiday lets in the North Norfolk and North Yorkshire council areas: the ban is to come in from the end of this month.

The society says it’s liaised with the councils over the holiday lets restrictions “as it has sought to balance local housing needs with the economic benefits tourism can provide.”

It follows a similar decision by the Society in 2022 when it became the first national mortgage provider to pull out of funding purchases of second residential homes, allowing it to instead increase lending to people getting on the property ladder. 

The society says it wants more emphasis placed on increasing the supply of homes, and a statement says: “The chosen postcode locations will be added to the building society’s systems to prevent any holiday let mortgage applications received in those areas from being approved. Existing holiday let borrowers are unaffected.”

The society’s chief executive, Richard Fearon, says: “This is another example of how we’re putting homeownership within reach of more people generation after generation. 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.

“There have been a range of measures introduced by Government over recent years to give local areas additional powers to restrict holiday lets. This adds to their arsenal of options and does so in a way which leaves power in the hands of local communities. 

“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.”