Mayors could gain new powers to impose overnight levy on holiday lets in England

The government have announced a consultation on new powers for regional Mayors to impose an overnight levy on holiday lets.

The Ministry of Housing, Communities and Local Government have confirmed any new levy would apply to visitors at accommodation providers, including hotels, holiday lets, bed and breakfasts, and guesthouses.

However, Propertymark warns an overnight levy could place pressure on holiday-let owners.

Put more money into local authorities

Secretary of State for Housing, Communities and Local Government Steve Reed said: “Tourists travel from near and far to visit England’s brilliant cities and regions.

“We’re giving our mayors powers to harness this and put more money into local priorities, so they can keep driving growth and investing in these communities for years to come.”

London Mayor Sadiq Khan welcomed the news on the consultation and claimed the overnight levy will help invest in the London economy.

He said: “Giving Mayors the powers to raise a tourist levy is great news for London.

“The extra funding will directly support London’s economy, and help cement our reputation as a global tourism and business destination. It also shows what can be done when ministers work closely with Mayors to devolve more powers to cities and regions.

“As part of developing our plans for the levy we will work closely with the hospitality and tourism sectors to ensure it delivers the maximum benefits for London and our brilliant businesses.”

Overnight levy could increase costs for holiday-lets

However, an industry body has warned that an overnight levy could increase costs for short-term lets and is urging holiday-let owners to participate in the consultation.

Nathan Emerson, chief executive of Propertymark, told Property118: “A thriving short-term lettings sector is vital for local economies, but any new mayoral powers must be proportionate and evidence-led. An overnight levy may raise important revenue for high-visitor areas, yet it risks placing further pressure on responsible property owners already operating on tight margins.

“Agents in holiday and tourist hotspots should monitor this closely, as added costs will influence behaviour and affect footfall, desirability, and flexibility across the housing market, from rentals and sales to second homes and short-term lets. With the consultation open until February and scope for local exemptions, it is important that those with concerns contribute.”

Scotland offers a clear warning

Propertymark points out that an overnight levy will come into force in Edinburgh from July next year, and England must be careful not to repeat Scotland’s mistakes.

Mr Emerson adds: “Scotland offers a clear warning. Under the Visitor Levy (Scotland) Act, councils can now tax paid overnight accommodation, and Edinburgh will apply a 5% charge from July 2026. Without strong links to wider tourism and housing strategies, such levies have already contributed to higher costs, reduced supply, and fewer options for tenants and visitors.

“Propertymark supports improved regulation, such as the upcoming short-term lets register, to level the playing field with long-term rentals and protect consumers. However, taxes continue to increase for private landlords, second-home owners, and additional property purchasers, and policymakers cannot tax their way out of structural housing issues.

“Unless Mayors align levy schemes with local tourism plans and the UK government better integrates housing and economic policy, England risks repeating the challenges emerging in Scotland. Propertymark will engage fully with the consultation to help ensure any new system supports communities without discouraging investment or reducing choice.”

The consultation can be found by clicking here.