Holiday Let Portfolio Mortgages London

Underwriting a London short-let and serviced apartment portfolio

Short-stay accommodation is underwritten as a commercially let asset rather than as residential property, and four operating variables drive the model. Occupancy across the full calendar year, not the peak weeks. Average nightly rate by season and by day of the week, which in London swings on the corporate and events calendar as much as on tourism. Booking channel mix, meaning the split between the platforms, corporate accounts and direct reservations. And who operates the asset, because an owner running units through a management agreement is a different credit risk from an owner running them personally. Portfolio cases test aggregated DSCR at 130 to 145% across the whole holding, on the reasoning that a weak quarter at one unit does not break a diversified rent roll.

None of that matters, though, until the planning question is settled, and in London the planning question is unlike anywhere else in the country. Under section 25 of the Greater London Council (General Powers) Act 1973, as relaxed by the Deregulation Act 2015, letting residential premises in Greater London as temporary sleeping accommodation for more than 90 nights in a calendar year is a material change of use requiring planning permission. Below 90 nights it is not. That threshold applies across all 33 boroughs and has no equivalent outside London. It is the first thing a lender asks about on a London short-let case, because a property being let for 200 nights a year without consent is generating income the borrower is not lawfully entitled to earn, and boroughs across the capital enforce against exactly that.

The consequence for finance is a clean split. A residential flat let short-term inside the 90-night limit cannot support a full-time short-let income model, so lenders will underwrite it on what it would achieve as a conventional let and treat the short-let uplift as unbanked upside. That is a buy-to-let or standard investment conversation, not a portfolio commercial one. The assets that genuinely fund as short-let businesses are those that sit outside residential use altogether: purpose-built serviced apartments and aparthotels operating in C1 hotel use or as sui generis, and properties that hold express planning permission for short-let use. Those have no nightly cap, they can be let 365 days a year, and they can be underwritten on the real trading numbers. Getting a borrower into the right one of those two categories at the enquiry stage is the single most valuable thing we do on these deals.

The tax position changed too, and lenders have absorbed it. The furnished holiday lettings regime was abolished from April 2025, so short-let property is now treated broadly like any other residential letting for tax, with the interest relief and capital allowances treatment that follows from that. Net income assumptions tightened accordingly and cover ratios moved out on new applications. It has not closed the market, but it has made operator track record and demonstrated trading history matter more than they did, and it has made the arithmetic on a leveraged single-unit short let considerably less forgiving.

Illustrative sizing. A block of six purpose-built serviced apartments in C1 use with a two-year trading history, corporate-weighted demand and a management contract in place sizes to around 65 to 70% LTV on an aggregated DSCR of 135% and prices in the middle of the band with LendInvest, Together or Hampshire Trust. A collection of residential flats being let short-term without express consent does not fund as a short-let portfolio at all, whatever the booking history shows, and the honest answer at enquiry stage is to refinance them as conventional lets or to pursue the planning consent first.

Finance structures for London short-let portfolios

The route depends entirely on the planning position of the asset. Serviced apartments and aparthotels in non-residential use fund on trading and DSCR terms. Residential flats constrained by the 90-night limit fund on what a conventional letting supports. We establish which category a property is in before approaching any lender.

Lender appetite for London short-let portfolios

LendInvest, Together and Hampshire Trust are the most consistently engaged specialist lenders on London short-let and serviced apartment portfolios, at 7.0 to 9.0% pa at 60 to 70% LTV. Shawbrook, Cambridge and Counties and OakNorth take the larger and better-established holdings, particularly where the units sit in C1 use with a management contract and audited trading figures behind them. Paragon and Aldermore cover single-asset cases on the specialist residential side rather than as portfolio facilities. NatWest, Lloyds, Barclays and Santander largely decline short-let income as a class, treating nightly-rate revenue as too volatile for term commercial debt, though they will look at a purpose-built aparthotel as a hospitality trading business. The recurring reason a London case fails is not rate and not leverage. It is a rent roll built on more than 90 nights a year of residential short-letting with no planning consent behind it, and no lender on the panel will fund that.