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Under Threat - The Holiday Lettings Sector

A confused and complicated approach to holiday homes in England, Scotland and Wales threatens the future of the holiday letting sector and puts at risk the billions of pounds it brings into the UK’s economy

There is currently no unified system for people in England, Scotland and Wales who let out their properties for short-term breaks. 

Scotland is introducing a controversial licensing system for the short-term lettings industry, Wales is opting to increase tax on those operating in the sector and various councils across England, including Cornwall, are seeking redress via council tax and within each of these countries there are regional differences based on different councils' policies.


Finest Retreats, one of the UK’s fastest-growing holiday let management agencies with properties across all three nations, believes it is clear UK authorities are intent on making the short-term lettings market as complicated as possible for existing and new entrants.

The agency has concerns that differences in timing and implementation will hamstring growth in the sector and significantly impact the economic benefit that holiday lets bring to areas heavily reliant on tourism. 

With mortgage rates rising, the agency fears many existing landlords will be put off holiday letting their homes and the various systems are also off-putting to new entrants. This would not only create a shortage of supply, but a reduction in tourists visiting the areas, thus knocking the respective local economy.

There appears to be no rhyme or reason for the different schemes that are emerging across the UK, between the home nations and between local authorities, other than to seemingly punish the holiday lettings industry just when it needs wholehearted support to thrive.

Despite the proven economic benefit of professionally-run full-time holiday lets to local economies, there appears to be a concerted effort by government at national and local level to make it as difficult as possible. This disparate approach to holiday lettings is damaging the prospects for the UK staycation and is likely to have a disastrous impact on local economies.

Data collected by Finest Retreats earlier this year showed that the positive financial impact of holiday lets far exceeds that of other kinds of second homes. The figures show that for an average three-bedroom property, a professionally run full-time holiday let contributes over six time more to the local community than a holiday home; and over 3 times more than an owner occupier or long term rental.

A UK-wide survey undertaken by OnePoll on behalf of the agency this summer indicated that a significant number of current owners might turn their full-time holiday lets into second homes in order to avoid the financial and additional administrative burden of licensing. 

Seventy two per cent of holiday let owners surveyed told us that they are likely to withdraw from the market if taxes and restrictions aimed at second home owners also apply to them,. The potential detriment to local economies must not be overlooked.

Scotland is taking the lead in terms of additional legislation. As October 1 all owners in Scotland wishing to offer a property for short-term rental must apply for a licence to do so. The first hurdle is to decide which of the four different types of licences is most relevant (of a choice of home sharing, home letting, secondary letting and home letting and home sharing).Then the licensing system is different depending on where in Scotland the property is located - there are 32 different local authorities all with different systems. Some require additional registration to local schemes.

There is the added complication in the City of Edinburgh in that properties in this Planning Control Area also have to submit a planning application in order to let the property on a short-term basis, as well as apply for a lettings licence. Other areas of Scotland may follow this lead with Badenoch & Strathspey having already applied for PCA status. Planning applications can take up to three months.

The cost of a licence differs depending on the number of rooms and guests, and between licensing areas. Planning application costs are in addition to licensing fees. Existing operators can continue to let without a licence until April 2023 but any new entrants after 1 October 2022 cannot take bookings or deposits until they are fully licenced

Meanwhile, in Wales, the imposition of a new “182 night rule” means that anyone whose property is not let year-round, regardless of the reasons why, will no longer qualify for small business rates relief and will have to pay up to two or three times the current rate of council tax on the property. Various councils are running their own public consultations on how to use new powers to clamp down on the number of second homes, such as Gwynned, which launched on October 4. Options include raising council tax by up to 300 per cent on holiday lets falling short of the 182 day marker. 

The Welsh government is also under-fire for enforcing letting out thresholds during the pandemic - even though many couldn’t let out their properties for large periods. Furthermore, the prospect of a new tourism tax risks alienating the country from other parts of the UK where no such additional cost applies. 

In England, prompted by significant backlash against second home owners exacerbated during the heights of the pandemic, the government has already announced new measures. In January, Michael Gove directed that from April 2023, owners will have to prove holiday lets are being rented out for a minimum of 70 days a year to qualify for business rates. Then in the Queen’s Speech in May, they proposed that from 2024, councils could be given powers to raise council tax on second homes which owners did not live in or let out for at least 70 days a year. 

Councils including North Yorkshire County Council have already indicated that they intend to impose a 100 per cent tax premium on second homes within the next two years. A government consultation was launched on June 29 to look at the effect of short-term holiday lets for those living in popular tourism destinations.

I am campaigning for increased open and honest dialogue nationally so the approach of local governments to the holiday lettings industry is unified, consistent and fair, maintains the standards already evident with many holiday letting management companies and makes sure that the UK staycation is not adversely affected at a time of potential growth as the cost of living crisis bites in 2023.

* Richard Bond is the owner of Finest Retreats *

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    • G W
    • 05 November 2022 15:58 PM

    am I really reading this?......would the government prefer to prefer to push UK holiday makers abroad instead of spending their money on UK resorts..... those still in the business will simply charge more that will deter holiday makers and make it cheaper to go abroad.

    Where is the joined-up thinking (in anything this lot do?)... compromise and abolish the Business rates but say that any property has to pay the same council tax as its Neighbour whether lived in, holiday let or sat empty......why because someone has been fortunate or worked hard to create ability to buy second home should they pay more council tax when they do not use the facilities that locals do?......

  • icon

    Unfortunately, we no longer have a real Conservative government. There are a few true blue MPs left but most of them are now more left than Labour and so easily influenced by the Woke, Liberal society. Ex PM Johnson is an example, with most of his family being strong Liberals and his wife being more green than a cabbage.


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