What Does the Spring Budget Mean for the Short Let Industry?

The Government has been open about wanting to clamp down on holiday lets for a while, particularly in the South where popular coastal areas such as Cornwall and Devon play a huge part in facilitating tourism and boosting local businesses and the economy as a result.

In the Spring Budget announced last week, Jeremy Hunt vowed to abolish the furnished holiday lets (FHL) regime in an effort to “make the tax system fairer for local communities”. However, this is set to add yet more pressure to holiday let owners who are already feeling the effects of high mortgage rates and energy prices, with little impact on the key issue in the private rental sector: lack of supply.

What Does this Mean for Short Let Landlords?

The FHL tax breaks made short term holiday letting a viable alternative to renting to long term tenants and scrapping these benefits is unlikely to make any noticeable difference to the supply of long-term rental properties in the UK.

Whilst there are valid concerns from locals looking to rent properties in coastal holiday let hotspots, the 2021 consensus from the Office of National Statistics revealed that 5.7% of properties in the South West alone are classed as vacant. This refers to properties with no residents living there with no indication of it being used for short term lets either – contributing nothing to these local areas. Realistically, a crackdown on these properties and would have been more effective at increasing the available supply for locals in these areas without compromising the economic affects short let properties bring.

Likewise, the government’s failure to address the estimated 1.4 million vacant properties across the UK and build enough housing to meet demand has meant that holiday let owners are left feeling the pinch and this may encourage more landlords to leave the market altogether.

When Will This Impact the Short Term Let Market?

Jeremy Hunt has said the furnished holiday lets regime will end on the 6th April 2025. It is estimated that this will raise an additional £300 million in taxes a year for the UK according to The Sunday Times report.Ultimately holiday lets help drive a big portion of local economies through tourism and their value has been somewhat overlooked.

However, it’s not all doom and gloom for short let landlords. Landlords with holiday lets may benefit from an increase to the VAT registration threshold, which is set to increase from £85,000 to £90,000 from 1 April 2024. This will mean short let landlords can earn more before having to register for VAT.

Advice for Short Let Landlords

At SevenStays. our team are here to support our holiday let landlords and help them adapt to these changes, working together to ensure the return on your investment is protected as much as possible.

We combine our industry expertise with state-of-the-art technology to deliver valuable all-in-one service whilst maximising your revenue and returns. Contact us to find out more.


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