Leeds Building Society will stop issuing holiday let loans in two popular tourist council areas for a 12-month trial period starting at the end of March.
The lender chose North Norfolk District and North Yorkshire councils for its holiday let loan trial as it identified them as tourist hotspots with the most housing pressures.
It consulted with the councils to find a way to balance the housing needs of residents while also maintaining the benefits of tourism.
Speaking to our sister title Mortgage Solutions following Leeds Building Society’s results announcement today, chief executive Richard Fearon said that while the mutual was a top-10 holiday let lender and had completed millions of pounds of business in this market, “we’re prepared to stand behind our principles, even if it costs us money”.
He also hoped other lenders would look at their own offerings to address the housing supply issue. At the end of 2022, the mutual also announced it would stop lending on second homes.
“We can only play our part. It’s a small part. The choice is between standing by and hoping others will fix it and doing what you can. And we want to do what we can, and we hope that others will join us,” Fearon said.
The decision comes after the Government announced short-term and holiday let properties would require specific planning permission to help improve the supply of residential homes.
Holiday lets have ‘a stranglehold’ on property pipeline
Fearon said that, while there were no “silver bullets” in solving this, the number of holiday lets in England had increased significantly.
“The reality is that in the country we have four million homes short of what we need… you need to pull lots of levers to make a difference here,” he added.
The chosen postcode locations will be added to the mutual’s systems to prevent any holiday let mortgage applications received in those areas from being approved.
Existing holiday let borrowers will be unaffected.
Fearon said: “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 the 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 that leaves power in the hands of local communities.
“We will learn through the trial how effective this measure can be in increasing the supply of residential homes and gain greater insight on steps that can make a positive difference.”
In 2023, Leeds Building Society completed £4.4bn in gross mortgage lending, with more than half of its business being issued to first-time buyers.
