BTL to Holiday Let

BTL to Holiday Let

20:54 PM, 21st May 2019, About 3 years ago 18

Text Size

Has anyone converted a BTL to FHL (furnished holiday let)? After 11 yrs in residency one of my lovely tenants is leaving.

Since this flat is a 5 min walk from Bournemouth’s best beaches, restaurants and bars, I am exploring the option of Holiday let. Since the Government is penalising Landlords with Section 24, the tenant fee ban, 3% SDLT surcharge and the abolition of Section 21, I feel this is a more profitable solution for me.

I’m sure FHL’s has it pitfalls, but I don’t have to worry about someone taking residency and me not being able to gain my property back.

Having been through 2 evictions in 15 years, I count myself lucky, but soon without S21 to rely on and a S8 not fit for purpose, I feel changing all my BTL’s to FHL’s is a safer option. Luckily all my BTL’s are near the beach.

Any advice anyone?

Sarah



Comments

by Neil Patterson

11:13 AM, 23rd May 2019, About 3 years ago

They may give you consent for a short time, but it is likeley they will want to change product or lender if holiday lets are outside criteria.

by CayC

13:23 PM, 23rd May 2019, About 3 years ago

Reply to the comment left by Sarah-Jayne at 23/05/2019 - 11:07In New York it’s a weekend only kind of situation so high numbers for Friday Saturday. Minimum two nights stay. But once weekends are booked I can change that to one night. I may try weekly only next year but I like weekdays off.
In Caribbean it’s minimum of 7 days, then again switched over after peak weeks are filled to capture last minute bookings

by Lesley Thomas

18:38 PM, 23rd May 2019, About 3 years ago

Reply to the comment left by CayC at 22/05/2019 - 12:49
Hi CayC, I will see what I can arrange via this forum in order to provide more information about Capital Allowances tax break for Holiday Let owners (existing and potential). There appears to be a number of landlords considering this move from BTL to Holiday Let. Let me see what I can arrange, so watch this space, so to speak... Lesley

by Nicole M

8:29 AM, 24th May 2019, About 3 years ago

Reply to the comment left by Lesley Thomas at 23/05/2019 - 18:38
There are special tax rules for rental income from properties that qualify as furnished holiday lettings (FHLs).

If you let properties that qualify as FHLs:

you can claim Capital Gains Tax reliefs for traders (Business Asset Rollover Relief, Entrepreneurs’ Relief, relief for gifts of business assets and relief for loans to traders)
you’re entitled to plant and machinery capital allowances for items such as furniture, equipment and fixtures
the profits count as earnings for pension purposes
To benefit from these rules, you need to work out the profit or loss from your FHLs separately from any other rental business.

https://www.gov.uk/government/publications/furnished-holiday-lettings-hs253-self-assessment-helpsheet/hs253-furnished-holiday-lettings-2019

by Tim

9:40 AM, 25th May 2019, About 3 years ago

Hi,
Holiday letting can certainly be beneficial. Generally speaking it makes more money than my AST’s but is a lot more work but the property stays pristine.
Only problem is if you have a flat, it is now almost certainly against the terms of your lease.
Google - Nemcova -v- Fairfield rents.

by Paul Baker

17:56 PM, 27th May 2019, About 3 years ago

I have a holiday let in Cromer which does very well. We do use Cottages.com & they do take a hefty fee but it works well for us. Running a holiday let is much more time intensive than the BTL's which I have, it's like running a hotel with bedding, towels, tea & coffee and of course TripAdvisor reviews and Reevo reviews to manage.
For your property to actually qualify as a FHL it must actually be successful, it's not sufficient to simply declare it as a FHL, it must prove itself for the tax breaks. I've copied a few lines below:

For the first 12 months of being a FHL, your property will effectively be in a ‘probationary’ period. During this time, the potential and actual availability of your property will be reviewed and for your FHL status to become a more permanent feature, your property must:
be available for 210 days (30 weeks),
be let commercially as a holiday property for 105 days (15 weeks)
and if occupied for more than 31 days by the same person/people, there must not be more than 155 days (total) of such longer lettings.
Days you, your friends or family spend in the property, for free or at a discounted rate, do not count towards the total occupation requirements.

by Sarah-Jayne

18:05 PM, 27th May 2019, About 3 years ago

Reply to the comment left by Paul Baker at 27/05/2019 - 17:56
Thanks that’s really useful information, it will definitely be available all year since I don’t intend to re-let on an AST unless the FHL becomes unprofitable. I’m just not sure how many days and when my minimum let should be, but I’ll guess I’ll work it out when I start advertising. S21 potential removal has pushed me in this direction.

by Lesley Thomas

9:40 AM, 28th May 2019, About 3 years ago

On our Loch Ness HL I use a number of HL booking services. AirBnB, HomeAway and Trip advisor are some of them. AiBnB is the cheapest and most popular with guests from all over the world. Paul is right where a HL is more work, but once you have furnished it and equipped it and set up on-line with good photo's and have a decent manager to organise the change over, meet & greet guests and cleaning then it can work very well. Some don't use managers, just cleaners and put the key in a key box outside the door. Some owners are fortunate enough to be able to do all of this themselves to keep costs down if they live close to the HL property. It depends on how much an owner wants to get their hands dirty to make this saving or if they have time to do so. Once you are able to demonstrate the HL is active and on-line available for bookings based upon what Paul has said, then this will satisfy HMRC.


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

BECOME A MEMBER

Landlord Tax Planning Book Now