The move is aimed at putting homeownership within reach of more first-time buyers by restricting the number of holiday lets.
Leeds plans to enter pilot scheme partnerships with councils to restrict holiday let lending, as Richard Fearon, chief executive of the Building Society, explained: “Our purpose is to put homeownership within reach of more people, generation after generation, and the volume of holiday lets in some parts of the country can be a big barrier.”
“We want to remove that obstacle. Mortgage lenders can be a valuable partner to local authorities seeking greater control over the growth of holiday lets.
“Entering a partnership will help find the balance between the significant role holiday lets can play in local economies and the detrimental impact they can have on housing for residents.”
Priced out
The lender noted that first-time buyers are widely priced out of the market due to house price inflation, the need to save a large deposit and current higher rates.
Underlying this is the severe shortage of supply of homes, but the mutual also pointed to the explosion of second homes and holiday lets.
Generation Rent recently found that the growth in holiday lets and second homes is nearly cancelling out the supply of new homes in some parts of the country.
In Copeland, Cumbria, for example, the growth in holiday homes accounted for 96 per cent of total homes added to the housing stock, for example.
Taking action
Last year, Leeds Building Society stopped lending to homebuyers looking to purchase a residential second home and now it wants to go further, limiting new lending on purchases of properties to be used for holiday lets.
Fearon explained: “Earlier this year we began discussions with local authorities to restrict new mortgage lending on holiday lets in areas where they feel those negatives outweigh the positives.
“Our proposal is for a 12-month pilot scheme, to assess the impact before seeking to extend to other areas.”
Existing Leeds Building Society holiday let mortgage customers would be unaffected by any changes, with only new lending to be restricted during the pilot schemes.
