United Kingdom
December 2022
PayProp Rent Report

More barriers for holiday lets

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More councils across the UK are getting ready to increase taxes on second homes – potentially hitting holiday lets as well.

From next April, local authorities in Wales will be able to charge up to 300% extra council tax, up from 100% currently. Gwynedd became one of the first to take advantage of this rule: from April, homeowners will pay an additional 150% tax.

Meanwhile, in England, councils are also preparing to hike taxes. The Levelling Up and Regeneration Bill, which is currently going through Parliament, allows for a tax premium of up to 100% on second homes. It is expected to take effect in April 2024.

Second home hotspots across the country are gearing up for the change. Councils in Cornwall, York and Herefordshire, among others, are working on bills that would allow them to charge the full 100% premium from the moment they are allowed to do so.

Short term rental investors may also be caught by the tax premium. Holiday lets that qualify as businesses pay business rates instead of council tax. But from next April, properties in Wales will have to be commercially let for at least 182 days per year and available to let for at least 252 – up from 70 and 140 at the moment. In England, properties will have to be available for 140 days and let for 70. Notably, below-market-rate rentals to friends and family will not count. 

Not just money

Higher taxes may not be the only new barrier to holiday lets. The government is now weighing up the idea of requiring planning permission to convert homes into holiday lets in England. Under the proposals, owners would have to apply to local authorities for a change of use. A government consultation on this is planned for early next year. Similar rules are also being considered in Wales, while owners in Edinburgh already have to apply for planning permission. The Prime Minister has also said that he will introduce a registration scheme for short-term lets.

A Private Members’ Bill that would allow local councils to require licences to convert residences into holiday lets has also had a second reading in parliament. The Short-term and Holiday-let Accommodation (Licensing) Bill would also allow councils to ban holiday lets from certain areas, charge additional taxes, and set restrictions on how many days properties can be let for. However, most Private Members’ Bills never become law.

Holiday lets have been blamed for pricing out local long-term renters in popular tourist areas. According to analysis of tax data by pressure group Generation Rent, 29 homes a day were converted to second homes or short-term lets in 2022. But holiday let owners and their supporters say that tourism brings much-needed income to these areas, and that driving them out would damage local economies.

Other short term let headlines

Falkirk Airbnb owners must pay for short term let licence – Daily Record

Crackdown on short-term holiday lets in Jersey planned – BBC

‘People are living in vans’: Porthmadog considers second home issue – The Guardian

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