Tenants squeezed out in England’s holiday home hotspots

Can I ask you to be more polite to squirrels please they’re actually very intelligent creatures. I bet you couldn’t bury 50 nuts and remember where every one is located.

And an FHL business is subject to VAT.

There is a lot of ignorance about holiday lets. Many cited problems are either not true or just theoretical.
You do not pay any council tax, instead you register for business rates. Your business rates will be zero if the rateable value of your property is below £15,000. If you have several FHL properties then you will start to pay business rates when the combined rateable value of all your properties exceed £15,000. You will also have to pay and charge VAT when your turnover exceeds £85,000. These problems are only like to occur if you have more than 2 properties. You don't have to advertise - it is free to list on Airbnb. Airbnb charge you just 3.6% including VAT of your booking invoice. If your place is good you will get repeat bookings and recommendations to friends. Of course you will get voids but a good holiday let will get at least 200 nights booked each year. Taxes are the same as with AST but also benefit of full mortgage tax relief and only 10% CGT when you sell. You will get not any bad debts. All guests pay in advance. No more S21, S8 or eviction notices.
A few tips for anyone thinking of FHL:
Only buy freehold
Buy properties which only sleep 4 or 5, you want couples or small families and want to avoid hen and stag parties.
Let for minimum 3 night stays.
Buy a property within walking distance of some shops and restaurants.
Avoid places like Cornwall which have a shortish season. Choose places which have regular exhibitions, Christmas and Spring fairs, maybe food festivals to get more all year round bookings.
It is quite usual to charge a small amount for cleaning - we charge £35 per booking which pays half of our £65 changeover costs.
Welcome packs don't have to be elaborate and need only be one pint of milk and some tea, coffee and sugar.
Offsite parking is a real plus for a holiday let and a small private garden is good as well.
If you wouldn't stay in the place yourself then don't buy it.
When its all kitted out then stay in it yourself and you will soon realise items that are missing.
Listen to suggestions from guests regarding missing items. We have ignored one request for a dressing table and another for net curtains!
Produce a comprehensive house brochure which you leave in your house but a month or so before you email them directions to your property, key safe code etc, then also send them Word document of house brochure so than can read beforehand.
If you run it well you will get people from abroad. we have had guests from Holland, Spain, USA and Australia.
DYOR before you start. You still need Landlords Gas check but don't need 5 year electrical test, but probably advisable on an older property. You will need a fire extinguisher and fire blanket. Need to work out a plan of how to escape in case of fire. Security lighting in case of a power cut also worth installing, etc,etc.
There are often major problems and delays with flying, especially at holiday times. If the weather looks reasonable many people are often choosing to stay in UK.

Reply to the comment left by Dennis Forrest at 26/01/2024 - 09:08
Great advice and yes we did all that. Not aware of the CGT issue though, Will check that one out. We went luxury end of market with one as a penthouse flat. The location in a city area 200 metres from the main central shopping, station and restaurants and our own parking spaces. But still it attracted some unsavoury guests, Contractors working on new apartment blocks and conversions were a good longer term money but they wanted 5 or 6 into our 2 bed penthouse. Cost pppn issue. Competition is tough as everyone is doing it now and they seem to keep lowering the prices and that is what the punters want. Price not quality. Like you say, right place with a good network and organisation it should work well.

Reply to the comment left by Bryan at 26/01/2024 - 15:22Regarding the 10% CGT just Google 'Business Asset Disposal Relief'. The good thing about this is that it only needs to have been running as a qualifying holiday let for a minimum of 2 tax years. The other thing is there is no proportioning; so say you had a second home and after 5 years you converted/used it as a holiday let for the next 5 years you will only pay 10% CGT on the whole gain. HMRC will not say we want 28% CGT on the first 5 years when it was a holiday home and just 10% on the last 5 years capital gain. IT MIGHT EVEN PAY TO CONVERT A PROPERTY THAT HAS BEEN ON AN AST FOR MANY YEARS TO A HOLIDAY LET FOR AT LEAST 2 YEARS BEFORE YOU SELL IT - ESPICIALLY WITH A LARGE CAPITAL GAIN - It's also easier when you come to sell- you just honour bookings up until completion date - please check with a tax account on this before anyone goes ahead with this - but this is my understanding. see article below: double check this advice is correct:-
How do I Convert my Property to a Furnished Holiday Let?
Because of the recent changes, some BTL landlords are turning to the holiday lettings market to offset some of their losses. Furnished holiday lets (FHL) were entirely unaffected by Section 24 provisions, and by converting their buy-to-let properties into furnished holiday homes, a number of forward-thinking landlords have been able to effectively sidestep the new legislation. And it’s easier than you might think. For your property to qualify as an FHL, you just need to satisfy a few key requirements:
The property has to be based in the UK or the European Economic Area (EEA).
The property must be furnished and let on a commercial basis with a view to making a profit.
You must let the property commercially to the public as furnished holiday accommodation for at least 105 days a year.
During any financial year, the property must be available for commercial letting as holiday accommodation for at least 210 days.
What are the Benefits of a Furnished Holiday Let?
As we’ve seen, converting your BTL property to a furnished holiday let needn’t be a complicated process, and if your property qualifies as an FHL there are a number of lucrative incentives to be had:
As outlined above, there’s no tax relief restriction for finance costs, meaning you’ll be taxed on your profits rather than your overall turnover.
Because it’s classed as a business asset, if you sell your furnished holiday let you’ll be able to claim capital gains tax relief for traders, including entrepreneurs' relief, rollover relief and holdover relief.
With an FHL property, you’ll be entitled to plant and machinery capital allowances for things like furniture, fixtures and equipment.
Any profits you make on your FHL property count as earnings for pension purposes.
With all the inherent benefits, it’s no surprise that thousands of private landlords have decided to convert their BTL properties into furnished holiday homes. But is the FHL market really the best solution?
Are There Any Risks Involved in Converting my BTL Property?
While the FHL market looks like the best, most lucrative option for private landlords in an increasingly unforgiving market, like any new business venture, it’s not without its risks. For one, BTL landlords that have been used to enjoying long-term lets of 12 months or more may get a bit of a culture shock. While longer-term lets are permitted, these must not exceed 155 days. So in order to keep your property occupied and profitable all year round, you may have to revise your existing business model. Here are a few other pitfalls to consider before dipping your toe in the holiday lettings market:
If your annual turnover exceeds the VAT registration threshold you’ll have to charge VAT on your rents, creating extra paperwork and potentially making your property less attractive to tenants.
While lets of more than 31 days are permitted, they don’t count towards your annual letting condition of 105 days.
Any loss incurred on your FHL business cannot be offset against any other income or gains, including any rental income from non-FHL properties.