The Chancellor Jeremy Hunt has abolished the tax reliefs on holiday lets in an attempt to ease the housing crisis in many popular vacation spots. The change will take effect from 6 April 2025 and 1 April 2025 where property is held in a corporate wrapper.
It is undeniably true than many landlords have chosen to rent out their property on short term lets attracted by the potential for higher rents and more generous tax treatment.
Currently, landlords of holiday lets benefit from full deduction for loan interest against profits together with the ability to claim capital allowances on fixtures and fittings, furniture and integral features within the property. There are also attractive Capital Gains Tax reliefs, namely Business Asset Disposal Relief (10% rate of tax), Rollover Relief when investing in qualifying replacement property and Business Asset Gift Relief on transfers to other individuals.
They will all be removed from April 2025.
These reforms aim to sit alongside proposed changes to the planning system. These changes are intended to create a new planning use class for residential property not used as a sole or main home. There will also be a mandatory national register intended to help local authorities understand the extent of short-term lets in their area and the effects on the communities.
Landlords with holiday properties in prime locations that continue to command premium rents may continue to see a healthy return, but it may leave landlords questioning the viability of a holiday let portfolio exploring possible sales or long-term rent.
It should also be remembered that where a holiday home is for personal enjoyment these changes are unlikely to make much of an impact.
Contact our Property Team
If you would like to discuss any of the points raised in this article, please do get in contact. Thom Wilkinson is a Partner specialising in Property Law and is contactable on: +44 (0)20 7692 7581 or twilkinson@bishopandsewell.co.uk
At Bishop & Sewell, we have more than 40 years’ experience in property with a particular focus on Landlord & Tenant. If you are thinking of buying a leasehold property, or if you already own a leasehold property and you have a question about obtaining a consent to alterations that you are planning please call 020 7631 4141 and ask for a member of the Property team, or email leasehold@bishopandsewell.co.uk.
The above is accurate as at 07 March 2024. The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.
