Leeds Building Society has stopped lending to investors buying holiday lets in areas of North Norfolk and North Yorkshire in a bid to relieve pressure on local housing.

The society has worked with both councils on a 12-month trial that will halt new loans in places where housing pressures are most serious. In 2022, the society became the first national mortgage provider to pull out of funding purchases of second residential homes and focus on lending to people getting on the property ladder.

According to Generation Rent, there are more than 73,000 holiday homes in Great Britain, with latest figures showing an annual increase of 7,000. North Yorkshire was one of seven areas where the growth in holiday homes effectively cut new supply of homes by half.

Stranglehold

Leeds Building Society chief executive, Richard Fearon (pictured), says in some areas, holiday lets have grown to have a significant stranglehold on the pipeline of homes available for local people.

He adds: “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.”

It follows the announcement by the government to require planning permission for short-lets and to set up a mandatory national register. More than 35,000 homes have become holiday homes or short term lets since 2019, but the government is proposing to automatically grant these properties permission to remain as holiday lets.

Ben Twomey, chief executive of Generation Rent, has expressed doubt that changes to the planning system would be enforceable.

He adds: “The government must go further and introduce local holiday let licensing schemes, which could give councils proper oversight of how many homes in their area can be let out as short-term lets based on local need.”