A leading building society has announced it will stop offering mortgages for new Airbnb properties in parts of England. This decision follows the announcement of government plans that aim to free up homes for local residents and regulate holiday lets more strictly.

Leeds Building Society is setting a precedent by halting the provision of new mortgages for holiday let owners in North Norfolk and North Yorkshire, starting at the end of March. This initiative, lasting for 12 months, is in response to the growing concerns over the scarcity of housing available for locals in these tourist-favored regions.

Richard Fearon, the Chief Executive of Leeds Building Society, emphasised the strain short-term lets have put on the housing market, making it difficult for new homes to be built for local communities. By implementing this trial, the building society hopes to understand the impact of such measures on increasing residential home availability.

Previous Efforts and Future Directions

This is not the first time Leeds Building Society has taken steps to address the housing crisis. In August 2022, they ceased offering mortgages to second-home buyers across the country, aiming to make more homes available for first-time buyers. The move proved fruitful, with first-time buyers constituting half of the new lending business in the first half of 2023.

The new restrictions will particularly affect those looking to buy properties for Airbnb purposes in selected areas of North Yorkshire and North Norfolk. Properties in tourist hotspots like Scarborough, Whitby, and Blakeney will be under scrutiny, with specific postcodes being flagged in the lender’s system to block holiday let mortgage applications.

Local Councils and the Housing Crunch

The popularity of these areas as holiday destinations has led to significant housing pressures, as reported by both North Norfolk District Council and North Yorkshire Council. In North Norfolk, for instance, the waiting list for affordable housing stretches to 2,500 households. The councils are exploring various measures to address these issues, including a proposed tourist levy similar to that of Paris to aid strained finances.

Industry Reaction

Andy Fenner from the Short Term Accommodation Association criticised the building society’s move, arguing it would not significantly impact the availability of homes for locals. Instead, he believes it threatens the tourism industry and the jobs it supports. Fenner contends that holiday lets play a crucial role in the local economy and that such lending restrictions might inadvertently harm the very communities they intend to help.

Government Intervention

Levelling Up Secretary Michael Gove recently announced new regulations requiring planning permission for new short-term lets, aiming to prevent them from undermining local communities. However, these rules will exempt those who rent out their main homes for up to 90 days a year, focusing on new entrants to the holiday let market.