There are some great advantages to owning a holiday let, least of all being able to use it yourself several times a year.
In addition to the tax benefits, ensure you take the following into consideration if you are thinking of investing in a furnished holiday let:
Research several areas and choose your location and type of property wisely as this will influence the amount you can charge. Many holiday let owners choose somewhere that they love to spend time. However, also do your research into areas you are considering; what attractions are close by, what amenities and restaurants are nearby, are there any seasonal issues to be aware of?
Once you have an area in mind, consider the visual appeal of your property. The first impression a potential customer has will be through a screen, so an eye-catching ‘hero’ photo is key for capturing attention. Whether it’s a sunny shot of roses climbing around the porch or a sunset coastal view from the bedroom window, ensure your property is visually desirable.
Are you intending to take a hands-on or hands-off approach to running your holiday let? Factor in marketing costs to achieve the required occupancy rate to qualify as a furnished holiday let, plus the time of cleaning, maintenance, repairs, and day-to-day activities required to run your business. You may wish to engage a holiday let management company to market and maintain your holiday let, which will need to be factored into your planning costs.
Finally, be really honest with yourself about how you intend to use your holiday let. Are you planning to use it personally several times a year? Will you let it out cheaply to friends and family? Remember one of HMRC’s occupancy conditions; the property must be rented out to the public for at least 105 days (15 weeks) for the 210 days available, not including private or discounted use by yourself, family or friends.
If you have no plans to rent your property out to the public, then it will not meet the statutory criteria for a furnished holiday let and will not be eligible for the FHL tax benefits.
We hope this guide has been a useful introduction to furnished holiday let tax. If you have specific questions about furnished holiday lets or are planning to invest in a FHL and need advice, book a consultation with our team of accountants today. No matter how you prefer to invest in property, Provestor has the expertise you need. Our all-inclusive service includes everything you need to manage your portfolio's finances and taxes.Tour our accountancy service