Holiday park, resort and serviced apartment finance

Caravan park finance is commercial lending used to buy, refinance or develop a holiday park, caravan park or lodge site. It is secured on the land and the business together and repaid over an agreed term. Because the income comes from pitch fees, holiday hire and sales, lenders treat these sites as trading businesses rather than as residential property.

Lending on a business site like this is generally unregulated, and the lender looks at the operator's experience, the site licence and the planning position. Season length, how many pitches are owner-occupied or let as holiday hire, and the condition of roads, services and facilities all affect what a lender will offer.

Resort finance covers larger leisure sites such as holiday villages, lodge resorts and glamping sites with shared facilities. Lenders assess them on trading history, occupancy, the quality of the facilities and the management team. Expansion plans, such as adding lodges or a restaurant, may be financed with a mix of term lending and development finance.

Valuations for these sites are usually based on the business's earnings rather than on the bricks and mortar alone, so accounts and forecasts matter a great deal. Seasonal sites need to show how cash flow covers repayments in quieter months, and lenders often ask for several years of accounts before they will lend at higher loan-to-value.

Aparthotel mortgages and serviced apartment hotel loans fund blocks of apartments let for short stays with hotel-style services. Lenders look at the location, the operator, the nightly rate, occupancy and the length of any management agreement. A block run by an established operator under a long agreement is usually easier to finance than a new venture.

Single serviced apartments let through platforms are closer to holiday lets, and some lenders finance them with holiday let or serviced accommodation mortgages. The difference matters, because a whole block run as a business is assessed on trading, while a single unit is assessed on projected rent against the loan.

How lending on single short-let units works is explained on the Airbnb and short-term let mortgages page, including income tests.

Buying a single static caravan or holiday lodge on a park is rarely financed with a mortgage, because a caravan is not land or a building a lender can take as security. Buyers often use savings, a personal loan or finance offered by the park operator, and terms depend on the age of the unit and the site agreement.

Some lodges on long leases with planning for permanent residential use can be mortgaged, but these are the exception. Checking the site licence, the pitch agreement and the length of the season shows what kind of borrowing is possible.

Holiday homes built on their own land, such as cottages and bungalows, are different again and can be financed with holiday let mortgages.

Lenders for holiday parks, resorts and aparthotels differ on the size of loan they consider, the trading history they need, the loan-to-value and whether they will fund expansion. High-street banks with leisure teams, specialist commercial lenders and some private lenders all work in this market, and their appetite changes with the economy.

Comparing offers on the total cost, the covenants in the loan and the repayment profile across the season gives the clearest picture. A broker with leisure property experience can say which lenders suit a particular site. The holiday let mortgage lenders page covers lenders for individual holiday homes.