Are holiday let owners trying to sell up?

Some short-term property lettings will be put on the market following the abolition of the furnished holiday let tax advantages they benefited from. These are most likely going to be from less desirable, lower yeilding areas, whilst those owning property in premium holiday areas, will hold on to their assets. Broadly speaking though, these are higher yielding that the Buy-to-Let alternative and those doing well from existing holiday or AirBnB property will be able to absorb the costs of the new tax regime, accepting that profits will be lower. Running holiday letting businesses can be a lot of work, so many will be diligently working out theire new bottom lines to figure out if it remains worth it.

Its too early to say if the changes anounced yesterday will have holiday let owners drifting away from the market, just as traditional landlords have been doing over recent years. But with the added pressure it is sure to come. Holiday lets understandibly have greater running costs due to regular turnover of guests, so with the added pressure from HMRC breathing down their necks some will be asking if its worth the extra burden. Those who have the benefit of little of no mortgage secured on the property will I'm sure stay in the market as it can be very lucrative, however over the last couple of years many who have entered this market have done so without much wriggle room in their finances, trying to cash in on a higher annual turnover, so will undoubtely feel the pain as the profit is stripped out.

The barrage of WhatsApp messages from second home owners, expressing their contempt for the change in FHL tax benefits, raised concerns. But the financial repercussions aren't as dire as their initial impulsive responses suggested. Considering the substantial wealth of the second home owners in our network, it's unlikely they'll rush to sell their properties.

More troubling is the potential shift where second home owners might cease renting out their properties altogther, adversely affecting the tourism economy in coastal areas. This could lead to an increase in vacant homes, as owners might not find the rental yield worth the perceived hassle.

It may be too soon to say for certain what the impact abolishing the Holiday Let reliefs will have, but I dont think we will see the owners selling up in a hurry due to this. I imagine the vast majority will just inflate the rental costs to make the figures work for them.
So if you think booking a cottage for a week in Cornwwall is extortionate now, just wait.

I have not yet observed a significant uptick in inquiries from clients wishing to sell their holiday let properties in direct response to the recent Budget announcements, it is early days. The changes to Capital Gains Tax (CGT) on property sales and the adjustments in Furnished Holiday Let (FHL) tax benefits have the potential to influence market behavior over time. Historically, I've seen policy shifts begin with single let landlords before expanding to other property sectors. While it's too soon for a definitive trend, I remain vigilant and prepared to assist our clients in navigating these changes.