Holiday let profits rise despite tax changes

Nearly half of holiday let landlords say their profits have increased since Furnished Holiday Let (FHL) tax advantages were abolished, Cumberland Building Society reveals.

For some, that has meant charging more for a night’s stay, with 47% raising their nightly rates.

The lender’s Holiday Let Index found that 48% reported higher profitability, while a further 19% said profits were broadly unchanged.

Meanwhile, 46% have focused on increasing occupancy since the tax changes.

Holiday let running costs

Cumberland’s head of intermediary lending, Grant Seaton, said: “What I take from these findings is that resilience in the holiday let market is not passive.

“Owners are having to work for their returns.”

He added: “They are looking much more closely at pricing, occupancy, finance costs and how each property is run, rather than assuming demand alone will produce a good result.

“That is an important distinction because a strong gross yield does not automatically mean a strong business.”

Guests book shorter stays

The report also reveals that half of holiday let landlords saw more last-minute bookings.

Shorter stays were also becoming more common for 39% of respondents, and the same proportion had noticed greater price sensitivity among guests.

On returns, 86% said they were achieving gross rent yields of at least 5%.

The most reported yield band was between 5% and 6%, accounting for 44% of owners.

Asked about future yields, 61% of owners said they were positive.

Also, 30% intend to buy another holiday let within the next 12 months, while 25% plan to expand their portfolio.