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Nearly three-quarters of holiday let owners concerned about regulatory and tax changes

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  • 13/05/2024
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Nearly three-quarters of holiday let owners concerned about regulatory and tax changes
Around 65% of holiday let owners are worried about recent changes in the sector, with increased taxes causing the biggest concern.

According to a report from Sykes Holiday Cottages, which analyses revenue data and booking figures and surveyed 500 holiday let owners, this includes regulatory or tax adjustments introduced in Scotland and Wales.

The UK Budget also confirmed that the furnished holiday let tax (FHLT) regime would be abolished from 1 April 2025. Other key changes include higher rates of tax and its impact on affordability, tourism levies and licensing schemes.

Regarding the FHLT scheme, Sykes Holiday Cottages’ specialist tax advisory partner Zeal said that those impacted by the change could lose an average £1,890 per year in tax, based on an average mortgage balance of £189,000 and assuming they are a higher-rate taxpayer.

However, research suggests that an estimated 57% of holiday let owners do not have a mortgage on their property and so are less likely to be impacted by the removal of the FHLT scheme.

The report found that 86% of owners in this space have not even considered exiting the market, and half of owners are considering buying another holiday in future despite the changing regulatory landscape.

Sykes’ research also found that 81% of such homeowners say residents local to their properties welcome tourism and somewhat rely on it, with nearly all stating that it is unlikely a local person would even purchase their let if they did ever sell it.

The report added that demand for staycations is still growing, with an 8% increase in bookings year-on-year in 2023, up 71% versus pre-pandemic levels.

Sykes continued on to say that the average turnover of a UK holiday let in 2023 was £24,500 versus £24,000 in 2022.

In February, the government announced a planned clampdown on holiday lets.

 

The Cotswolds nabs top holiday let revenue spot

Drilling down into different regions, the Cotswolds topped the ranking of annual average revenue, at £28,500.

This was followed by Dorset and Cornwall at £27,000 and £26,500 in annual average revenue respectively.

Northumberland and East Anglia are recent entrants to the top 10 list, going from 19th and 18th to seventh and eighth respectively this year. The annual average revenue is pegged at £25,000 for Northumberland and £24,900 for East Anglia.

Graham Donoghue, CEO of Sykes Holiday Cottages, said: “Staycations have been growing in popularity over the past decade, and right now, demand for our UK holiday cottages is higher than ever, with the average annual income of a holiday let owner up as a result.

“But, of course, the past twelve months have been slightly different for the industry, and our latest report therefore also reflects how holiday let owners are feeling in light of the recent changes.”

He continued: “Despite changes, it is clear that holiday letting remains a profitable and rewarding long-term business model, with the nation’s love of holidaying at home and exploring our incredible country going nowhere. The Cotswolds, in particular, has had a positive year, claiming the top spot for earnings across the UK.

“At Sykes, we’re passionate about holiday letting and the benefits it brings to local economies across the country by driving spending, providing direct employment, and supporting independent businesses. We will continue to guide owners through their short-term let journeys, helping them to run successful holiday homes, no matter what.”

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