With the general election looming, holiday let owners find themselves navigating uncertain waters in an already tumultuous sea of regulatory changes and economic shifts.
March’s Spring Budget announcement stirred both excitement and apprehension among owners of furnished holiday lets (FHLs). The surge in short-term holiday lets, fueled by the growth of platforms like Airbnb, prompted a slew of policy changes, including the abolition of long-standing tax breaks.
Central to these changes is the phasing out of the Furnished Holiday Lets (FHL) Regime, which has long provided tax advantages to property owners renting out their homes for vacations. Additionally, a reduction in the capital gains tax rate on non-permanent residential properties has been proposed, alongside the discontinuation of multiple dwellings relief for stamp duty land tax.
These impending policy adjustments build upon regional measures implemented in 2023, aimed at bringing new life to “hollowed-out” holiday destinations. From double council tax for second homes in Scotland to changes in business rates criteria in Wales, these measures reflect a broader governmental concern about balancing tourism growth with community sustainability.
Amidst this backdrop of regulatory flux, the upcoming general election on July 4th introduces a fresh layer of uncertainty for holiday let owners. The potential for a change in government increases the likelihood of delays and alterations to the Spring Budget’s proposed reforms, contingent upon the winning party’s agenda.
A Conservative victory will likely signal continuity in the planned reforms, in line with the party’s track record for policies that balance economic growth with property owner interests. Michael Gove announced in February that second-home owners planning to let their properties on Airbnb will need to start seeking planning permission, while Rishi Sunak has spoken about new measures to penalise antisocial behaviour in Airbnb properties.
Meanwhile, a Labour triumph could usher in even more stringent measures for second homes and holiday lettings. Labour’s Shadow Housing and Planning spokesman, Matthew Pennycock, has previously expressed dissatisfaction with the government’s proposed reforms, suggesting that they do not go far enough in tackling issues related to second homes.
Regardless of the election outcome, property owners are urged to adopt proactive planning and strategic adaptation to navigate the evolving landscape of holiday lettings. Read our full report on the future of holiday lets to discover how holiday homeowners and the wider housing market could be affected by the proposed changes – and how to prepare for them.
For a more comprehensive look at what the upcoming changes might mean for owners of Furnished Holiday Lets, read our latest opinion piece, The Future For Holiday Lets: New Challenges And Opportunities.