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Scrapping of holiday lets tax relief a "significant shift in the property investment landscape"

ended 06. March 2024

In today's Budget, the Chancellor announced that tax relief for furnished holiday lets will be scrapped so as to improve the availability of long-term rentals. Newspage asked brokers and property experts for their thoughts, below. One said it “represents a further significant shift in the property investment landscape”, a second added: “Aspiring homeowners will welcome this news with open arms.” A third said: “This is yet another blow to professional landlords.” Their views are below.

15 responses from the Newspage community

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Rohit Kohli
Director at The Mortgage Stop
Yet another blow to landlords who seem to be cannon fodder for this Government, which is strange given how many of them are landlords themselves. The limited company route is looking like the only way forward for anyone looking to invest in rental properties. There was nothing in this Budget to enourage more building, just a complete lack of imagination and ideas.
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Dariusz Karpowicz
Director at Albion Financial Advice
This development represents a further significant shift in the property investment landscape, signaling a broader strategy that may affect a range of investment properties, including those held by limited companies. The decision to phase out tax incentives for holiday lets, which were previously perceived as a leverage point for diversifying investment portfolios within the real estate sector, hints at a broader governmental effort to recalibrate the housing market. It suggests an increasing scrutiny over investment models that may contribute to the housing shortage or affect the availability of long-term rentals. Given these circumstances, it is prudent to consider the broader implications of this policy change. This may include anticipating potential adjustments in the tax framework affecting limited company landlords, as part of an ongoing strategy to address the housing market's dynamics and encourage the provision of long-term housing solutions.
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Amit Patel
Adviser at Trinity Finance
Aspiring homeowners will welcome this news with open arms. This will put home ownership in reach of more people who live in areas where holiday lets have seen a huge boom since Covid. In recent years, many people have been priced out of buying a home in the villages and towns where they have grown up where there has been a high concentration of holiday lets. This is a win for the public, but a blow to property investors.
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Graham Cox
Director at Bridging Hub
Abolishing holiday lets tax relief is long overdue. The fact is places like Cornwall and Devon have some of the lowest wages and highest house prices in the country. Much of this is driven by non-locals snapping up homes to let out to holidaymakers. The priority has to be enabling the housing needs of the local population.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Communities in the likes of Devon, Cornwall and Angelsey will welcome this change, as housing shortages are a real problem in these areas. This could have the effect of damaging these local communities though, as tourism is reduced. This is a careful balancing act that the Government needs to get right to protect those born and brought up in areas that attract many tourists, without damaging their chances of a prosperous life if they choose to remain in the area.
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Michelle Lawson
Director at Lawson Financial
This Budget was another missed opportunity to help people get on the housing ladder and really generate some positivity in the property market. Instead, we've had another tax raid on landlords. Local residents have the same opportunity to buy properties as landlords do- the bigger problem is deposits, interest rates and affordability. This isn't going to generate more properties for holiday towns at all, it is just an easy tax win to put money in the coffers. This Government have clearly ignored all the advice given to them about stimulating the property industry.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
Holiday let landlords should be considering limited companies for their new holiday let purchases to offset this news on the tax relief being scrapped. It's a shame landlords have been impacted yet again as the last 18 months have been the most challenging for those with longer term lets. To impact the rest of their portfolios that may contain holiday lets, which allows them to balance their higher rates across their debt, is another body blow from this Government.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
The abolition of the Holiday Lettings regime closes the net on those benefiting from the tax advantages of short-term lettings. The changes will hit holiday let and Airbnb businesses hard, bringing the taxation of them more in line with buy-to-let investments. These changes are expected to add an extra £300 million to the Treasury's coffers.
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Imran Hussain
Director at Harmony Financial Services
A kick in the proverbial for holiday let investors but welcome news for first-time buyers in areas where holiday lets are rife. We all expected some major shake-ups but all the property market has received is a little extra taxation, and nothing to solve the issue of building more affordable homes.
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Justin Moy
Managing Director at EHF Mortgages
Holiday let activity had started to fall anyway as the opportunity to travel overseas has become more popular again, so this may be a bit late to install, but will hugely support those who have become outpriced in their local areas. Many will look to sell given this impending tax increase and falling demand. Let's hope those first-time buyers can afford the mortgages required to buy.
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Mark Robinson
Managing Director at Albion Forest Mortgages
Unfortunately, what this Government doesn’t seem to realise is that the lack of long-term lets is due to the profit in them falling through the floor due to increased regulation and taxation. This is just punishing holiday lets for the sake of posturing.
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Akhil Mair
Director at Our Mortgage Broker
Looks like the holidays are over for landlords in the vacation business. Time to dust off those long-term rental contracts and embrace the 'staycation' for our finances.
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Charles Breen
Founder at C B
The abolition of tax relief for holiday lets is an exercise in futility. It fails to address the supply drought, while guaranteeing higher costs for holidaymakers, especially families. This policy seems to misunderstand the market's needs completely. This is a Government completely bankrupt of ideas and backbone. Given the oportunity to reform the supply shortgage in housing, they have proved themselves unable to make tough decisions.
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Matthew Jackson
Director at Mint FS
This move is designed to make landlords offer more properties in certain locations for long term rental. In reality it will probably make them sell the properties, which in Cornwall and Devon will mean people buying them as holiday homes. Why? Well a large number of our portfolio landlords added Holiday Lets and Airbnbs to their portfolios to supplement income and make up for rising mortgage costs and running costs of their standard rental properties in their portfolio. The Chancellor is removing this incentive, delivering yet another blow to professional landlords and one that will not have the outcome he would like.
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Gareth Davies
Director at South Coast Mortgage Services
This has been coming to holiday lets for a while now. You could argue the scheme is open to more abuse than regular BTL so I'm surprised it has taken the Government this long. However, it doesn't mean that locals in regions such as Devon or Cornwall are suddenly going to be able to afford properties that landlords may sell.