{"id":6099355,"date":"2024-03-27T07:50:36","date_gmt":"2024-03-27T07:50:36","guid":{"rendered":"https:\/\/www.buyassociationgroup.com\/en-hk\/?p=6099355"},"modified":"2024-03-26T20:47:54","modified_gmt":"2024-03-26T20:47:54","slug":"holiday-lets-good","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/en-hk\/2024\/03\/27\/holiday-lets-good\/","title":{"rendered":"Holiday lets: Are they still worth investing in since tax changes?"},"content":{"rendered":"

In this year’s spring budget, the Chancellor announced that the way holiday lets are taxed will change, so will that take the shine off the sector?<\/strong><\/p>\n

Short-term lets, also known as holiday lets, experienced something of a surge in popularity<\/a> over recent years, accelerated by the onset of the Covid pandemic. As overseas travel became either more difficult or less appealing – or both – along with cost rises, staycations<\/a> became a much more common choice.<\/p>\n

Short stays for business purposes also increased, due to the fact that so many more people were working from home for the majority of the time, increasing business travel for those who only occasionally commuted in for meetings.<\/p>\n

At the same time, many buy-to-let landlords<\/a> cashed in on this surge in demand in the sector, drawn by the promise of considerably higher rental yields<\/a>, as well as the option to use the property yourself for some of the year in many cases. This has been blamed for some of the reduction in the number of long-term lets available in the UK.<\/p>\n

Another major advantage for those looking into renting out a short-term let – often through a portal such as Airbnb, booking.com or Spare Room – was the fact that they were taxed differently to long-term lets, meaning more expenses and reliefs could be claimed.<\/p>\n

What’s changing for holiday lets?<\/h4>\n

As announced by Chancellor Jeremy Hunt in his latest Budget<\/a>, from next April, holiday lets will no longer be exempt from the Section 24 tax changes that came into effect for traditional buy-to-lets. Owners will therefore no longer be able to deduct mortgage interest payments from their rental income, but instead will need to claim a 20% tax credit from their tax liability.<\/p>\n

They will also be subject to the same capital gains tax as normal buy-to-lets, rather than qualifying furnished holiday lets being classed as business assets and therefore qualifying for business asset disposal relief. When owners come to sell, they will therefore likely face a bigger bill than before.<\/p>\n

Other reliefs specific to this sector will also no longer apply, such as business asset rollover relief and gift holdover relief, both of which can be used to reduce capital gains tax liability. Capital allowances for fixtures and fittings will no longer be available, with owners potentially being able to claim relief for the replacement of certain items.<\/p>\n

This was all put in place, according to the Chancellor, in a bid to level the playing field between short-term lets and long-term buy-to-lets, and it seems on paper that this could be effective in drawing fewer landlords away from the private rented sector, where they are very much needed.<\/p>\n

A good investment?<\/h4>\n

While the Chancellor’s changes may make holiday lets less appealing to many, they continue to have the potential to be one of the highest yielding property types if they are well-located and offer all the amenities expected in a modern market.<\/p>\n

Rob Oliver, director of distribution at Dudley Building Society<\/a>, says he does not believe the changes will significantly discourage people from the sector, as it remains a “profitable investment”.<\/p>\n

He explains: “I expect we will still see demand from existing landlords looking to diversify into holiday lets, as well as from expats.<\/p>\n

“For expats, a UK holiday let can make more sense than a traditional buy-to-let. Not only do they benefit from a regular income, but they also have a place to stay when visiting the UK. They may be renting out their own home in the UK, which makes it difficult to return as and when they please.”<\/p>\n

He also points out that to qualify as a holiday let, it only needs to be available to rent for 210 days a year, leaving it open the rest of the year to either use it yourself or offer it to family and friends.<\/p>\n

Looking at the statistics and the potential earnings from holiday lets, he says: “Although a long-term rental might offer a more hands-off approach for investors, holiday lets have the potential to provide a greater return on investment, and investors also benefit from capital appreciation over time – especially one in the right location.<\/p>\n

“On average, holiday let owners invest \u00a37,400 per year in their holiday let \u2013 minus mortgage repayments – according to Sykes\u2019 report. However, pick the right location and the amount an investor charges can be substantially more than what a standard buy-to-let would make.<\/p>\n

“Even if a holiday let owner rents it out for only 36 weeks of the year, holiday lets can still produce healthy returns. For example, a four-bed holiday let in Cheshire, costing \u00a3256,526, could garner an annual revenue of \u00a345,549, according to Sykes’ report.”<\/p>\n

BuyAssociation offers a wide range of property investment opportunities<\/a> across the UK, some of which are suitable for short-term lets. Get in touch today<\/a> to find out more.\u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

In this year’s spring budget, the Chancellor announced that the way holiday lets are taxed will change, so will that take the shine off the sector? Short-term lets, also known as holiday lets, experienced something of a surge in popularity over recent years, accelerated by the onset of the Covid pandemic. As overseas travel became… Read more »<\/a><\/p>\n","protected":false},"author":1069,"featured_media":6099356,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[8,2],"tags":[183,441,437],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/posts\/6099355"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/comments?post=6099355"}],"version-history":[{"count":1,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/posts\/6099355\/revisions"}],"predecessor-version":[{"id":6099357,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/posts\/6099355\/revisions\/6099357"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/media\/6099356"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/media?parent=6099355"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/categories?post=6099355"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-hk\/wp-json\/wp\/v2\/tags?post=6099355"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}