Could semi-commercial property be the next opportunity for landlords?

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Property118

Could semi-commercial property be the next opportunity for landlords?

For many landlords, the biggest challenge today is not simply improving rental yields. It is finding investments that still produce attractive returns whilst making commercial sense in an increasingly demanding regulatory and tax environment.

That is one reason why semi-commercial property has been attracting growing attention, and why today’s announcement from specialist lender LendInvest is likely to be of interest to experienced investors looking beyond traditional buy-to-let.

The lender has launched a new range of semi-commercial buy-to-let mortgage products, with two and five-year fixed rates starting from 5.94%. The products are available to qualifying individual and corporate borrowers, with applications continuing to be processed through specialist mortgage intermediaries.

According to LendInvest, the mixed-use sector now represents around 24% of all commercial lending activity. The lender also reports that applications for semi-commercial finance doubled during 2024 before increasing by a further 58% during the first half of 2025. Retail premises with residential accommodation above account for almost seven in ten applications, suggesting that this is becoming an increasingly established asset class rather than a niche investment.

For many Property118 readers, however, the financing announcement is only part of the story.

Lower acquisition taxes can materially improve investment returns

One of the most overlooked advantages of semi-commercial and mixed-use property is the considerably lower purchase tax payable compared with residential investment property.

Provided a transaction genuinely qualifies as mixed-use or non-residential, purchasers benefit from the commercial land transaction tax rates rather than the often much higher residential rates and surcharges.

The current rates are:

As with residential property taxes, these rates are progressive, meaning each percentage only applies to the portion of the purchase price within that band.

For investors acquiring larger assets, the savings compared with purchasing an equivalent residential portfolio can be substantial, leaving more capital available for refurbishment or further acquisitions.

Looking beyond traditional buy-to-let

Semi-commercial investments are not suitable for everyone. They require careful due diligence, different lending criteria and an understanding of both commercial and residential tenancy arrangements.

On the other hand, many experienced landlords find they can offer attractive cashflow, longer commercial leases, diversified income streams and, in some cases, significantly lower acquisition costs.

As increasing numbers of investors reassess the future direction of their portfolios, mixed-use property is likely to become an increasingly important part of the conversation.

The key question is not whether every landlord should invest in semi-commercial property. Rather, it is whether your current portfolio is still the best place for your equity to remain over the next ten or twenty years.

If you are reviewing your long-term investment strategy, retirement plans or considering whether restructuring your portfolio could improve cashflow and future flexibility, a one-to-one Property118 consultation can help you explore the options available and assess whether opportunities such as semi-commercial investment deserve a place in your future plans.

BOOK YOUR CONSULTATION TODAY

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Labour slammed as another minister cashes in on Right to Buy scheme

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Property118

Labour slammed as another minister cashes in on Right to Buy scheme

Another Labour minister has been accused of applying “one rule for them and another for everyone else” after making a 900% profit on a council house purchased under the Right to Buy scheme.

Despite the government moving to tighten restrictions on Right to Buy, Education Secretary Bridget Phillipson has been accused of hypocrisy after it emerged that she also benefited from the policy.

As previously reported by Property118, former Housing Secretary Angela Rayner also profited from Right to Buy, making a £48,500 profit when she sold her former council home.

Spiteful class-war hypocrisy

The Mail on Sunday reports that Ms Phillipson’s family used the Right to Buy scheme to purchase the council house she grew up in.

In 1990, when Ms Phillipson was six years old, her mother bought the two-bedroom council house in Washington, Tyne and Wear, where they were living, for £9,600 after receiving a 38% discount on its £15,490 market value.

The property remained in the family’s ownership until May 2023, when it was sold for £99,950, a 900% profit.

Conservative Party chairman Kevin Hollinrake said the revelations exposed Labour’s hypocrisy, telling the Mail on Sunday: “Labour have once again been caught red-handed displaying their spiteful class-war hypocrisy.

“They are gutting the very same right-to-buy scheme that Bridget Phillipson and Angela Rayner benefited from, pulling up the drawbridge after taking advantage themselves. As ever with Labour, it’s one rule for them and another for everyone else.”

Discount rules to be amended

Under government plans, for the right to buy scheme, the minimum eligibility period would increase from three to ten years before tenants can apply to buy their home.

Discount rules would also be amended, with discounts starting at 5% of the property value and increasing by 1% each year up to a maximum of 15% of the property value or the cash cap, whichever is lower.

A 35-year exemption would also apply to new builds, meaning newly built social homes could not be sold under Right to Buy for 35 years after completion.

Vile smear campaign

Hitting back at the accusations of hypocrisy, a spokesperson for Ms Phillipson claimed to The Telegraph that “the Conservatives’ vile smear campaign against yet another northern working-class woman tells you everything you need to know: they hate working-class people who do well.”

The spokesperson added that Ms Phillipson will help deliver “better life chances for working-class families denied opportunity by 14 years of Tory austerity.”

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Government signals enforcement may be funded via PRS Database fees

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Property118

Government signals enforcement may be funded via PRS Database fees

The government has hinted that fees collected from the Private Rented Sector (PRS) Database will be used to fund council enforcement.

In a written Parliamentary question, housing minister Matthew Pennycook confirmed the government is strengthening council enforcement powers under the Renters’ Rights Act.

The news comes as councils now have the power to issue on-the-spot fines of £7,000 to landlords for severe damp and mould in their properties.

Sustainable funding system for PRS enforcement

Mr Pennycook said: “Through the Renters’ Rights Act, the government is strengthening local authorities’ enforcement powers and extending and increasing ring-fenced civil penalties to support a ‘polluter pays’ approach to enforcement of the new tenancy system.

“In accordance with the New Burdens Doctrine, we will ensure additional net costs on local authorities resulting from the act are fully funded. To that end, my Department is providing £41.12 million to local housing authorities for this financial year to help them undertake their new enforcement responsibilities. This funding is in addition to the £18.2 million provided in 2025/26.

“Our aim over the long term is to establish a sustainable funding system for private rented sector enforcement based on future Private Rented Sector Database fee revenues. We will set out further details in due course.”

As previously reported by Property118, the government says the PRS Database fee will be “fair and proportionate” and has hinted at combining the registration process for the PRS Database and the Ombudsman, but has not confirmed whether landlords will need to pay separate fees for each.

Landlords face fine for failing to register on PRS Database

Councils will also gain the power to take enforcement action against landlords who fail to register on the PRS Database.

If a landlord lets or advertises a property without it first being registered on the database, they can be issued with a civil penalty of up to £7,000 or a £40,000 fine if they provide fraudulent information to the database.

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Landlords missing Rent Smart Wales license renewals risk fines

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Property118

Landlords missing Rent Smart Wales license renewals risk fines

Landlords in Wales could face fines of up to £5,000 if they miss the renewal date on their Rent Smart Wales licence.

The National Residential Landlords Association is urging licence holders to check their accounts as many approach, or may already have passed, their second renewal deadline.

Rent Smart Wales launched on 23 November 2015, with landlords and letting agents given a year to register and apply for a licence.

Many landlords completed the process during 2016 for a licence which lasts five years.

The NRLA says those landlords are now reaching the point at which a second renewal is required.

Wales landlord license

On its website, the NRLA says: “Since the scheme launched, 355 landlords and agents have been prosecuted and £53,600 recovered via Rent Repayment Orders.

“Licences are priced between £257 and £327 – depending on whether you pay online.

“And even if your renewal date is later in the year, it is worth checking now as early bird discounts are available for those who apply 42 days or more before their renewal date.”

Scheme has enforcement powers

Rent Smart Wales has enforcement powers against anyone who is not properly registered or licensed.

Landlords who do not know when their licence expires should log into their account on the Rent Smart Wales website.

The renewal date is displayed on the account dashboard.

Applicants must also show that they have completed the required training before a licence can be issued.

The post Landlords missing Rent Smart Wales license renewals risk fines appeared first on Property118.

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The guarantor trap: How raising the rent could release the person standing behind your tenancy

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Property118

The guarantor trap: How raising the rent could release the person standing behind your tenancy

Since the Renters’ Rights Act came into force on 1 May 2026, a lot of the guarantor conversation on here has focused on one fear. Now that fixed terms are gone and every tenancy is periodic, is the guarantor locked in for life? It is a fair worry. But in my work on tenancy and possession matters I keep seeing the risk pointed the wrong way round. The quieter danger is not that your guarantor is trapped forever. It is that you could release them by accident, and the most likely moment you do it is the day you put the rent up.

I want to walk through why, what the law actually says, and why none of this is as settled as either side of the argument tends to claim. I am not going to tell you what your guarantee does, because that depends entirely on the document you hold. I am going to suggest what to check.

This article is for general information purposes only. It does not constitute legal advice. Guarantee law is highly fact-sensitive, and the outcome in any case turns on the exact wording of the document in question. Landlords should seek independent legal advice for their specific circumstances, particularly where tenancy or guarantor arrangements are complex.

The old rule that still has teeth

The starting point is a Court of Appeal decision from 1878, Holme v Brunskill. The principle that came out of it is often called the variation rule. In broad terms, if the contract that a guarantee supports is varied without the guarantor’s consent, the guarantor may be discharged from liability, unless the variation is self-evidently insubstantial or could not possibly prejudice them.

The courts have applied that principle well beyond its Victorian origins. The point that matters for landlords is this. A guarantor agreed to stand behind a particular set of obligations. If those obligations change in a way that could be to the guarantor’s disadvantage, and they did not agree to the change, a court may treat the guarantee as discharged.

You can see why a rent increase sits close to the firing line. A higher rent is, on its face, a larger exposure for the guarantor than the one they originally agreed to. Whether a court would treat any given increase as a discharging variation is not something I can promise either way. But it is the kind of change the rule was designed to catch.

Why this collides with the new rent rules

Under the Act, there is now a single route to increasing the rent on an assured periodic tenancy. You serve the statutory Section 13 notice on the prescribed form, you can do this once a year, and you propose the market rent giving at least two months before it takes effect. Rent review clauses written into older agreements no longer do the job. GOV.UK guidance is explicit that rent increases by other means, including rent review clauses, are not permitted.

So the position many landlords are now in is that they will be raising rents more deliberately, and through a formal annual notice, precisely because the old contractual mechanisms have fallen away. Every one of those notices is a moment when the guarantor question is live.

Here is the honest caveat. There is a genuine argument that a rent increase imposed through the statutory Section 13 process is not a contractual variation in the Holme v Brunskill sense at all, because it is not something the landlord and tenant have agreed between themselves. It is imposed through a statutory mechanism. I have not seen that point tested in the courts in the specific context of the new system, and I would be wary of anyone who tells you the answer is obvious in either direction. What I can say is that it appears to be unresolved, and unresolved is not the same as safe.

It comes down to the wording of the deed

Whether a guarantee survives a rent increase, or survives the move from a fixed term to a periodic tenancy on 1 May, may turn almost entirely on how the document was drafted.

Well drawn guarantees usually contain what lawyers call anti-discharge or consent to variation provisions. These are clauses saying, in effect, that the guarantor’s liability continues even if the rent or the terms change. On the face of it those clauses do their job. The complication is that they tend to be read strictly against the landlord, as the party who put the clause forward, under what lawyers call the contra proferentem rule. Courts have also limited how far such clauses can stretch, holding in some cases that they may not cover a change going beyond what the original guarantee was ever meant to encompass. So a clause that looks watertight is not, by itself, a guarantee of a guarantee.

There is a second layer where the guarantor is an ordinary individual rather than a business. Where the guarantor is acting as a consumer, the fairness rules in the Consumer Rights Act 2015 can apply, and a court must take the fairness of the term into account. A clause binding a private individual to an open ended and growing liability, with no way out, is the kind of term that could attract scrutiny. I am not saying it would fail. I am saying it is not a question you want to be discovering the answer to in a possession hearing.

What I would consider doing

None of this means guarantees are worthless. It means the document, and the paper trail around it, may matter more than they used to.

If it were my portfolio, I would think about four things. I would have the guarantee itself looked at by someone who does this for a living, rather than assuming a form downloaded years ago still does what I need. I would check whether it was drafted to extend to a periodic tenancy, and to survive rent changes, in clear terms. I would keep the signed deed, any explanatory information given to the guarantor, and the copy of the tenancy agreement they were shown, all dated and together. And whenever I served a rent increase, I would consider notifying the guarantor in writing and keeping proof that I did, so that if the consent question ever arose I would not be relying on memory.

None of this requires any particular tool. But it does require a habit. A guarantee you cannot evidence, attached to changes the guarantor was never told about, is a guarantee on shaky ground.

**

At LLCR, I built tools aimed squarely at this problem. The free Form 4A rent increase generator produces a Section 13 notice on the prescribed form and flags the timing rules before you serve. Alongside it, LLCR gives self-managing landlords a single place to store the guarantee deed, the information the guarantor was given, and a dated record of every rent change they are notified of. Each file is timestamped at upload and tamper evident, so if the consent question is ever raised, you can show what existed, in what form, and when, rather than relying on memory.

Not sure where your exposure sits? LLCR’s free compliance checker runs through the legal requirements for your tenancy in minutes.

A partnership with Property118

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Discount: 10% lifetime reduction on all Starter and Pro plans, monthly or annual. Stacks with founder pricing for the first year and continues to apply on standard pricing once founder slots are filled.

None of this means guarantees are not worth taking. It means the document, and the trail of evidence around it, may matter more than they ever did under the old system. If you are relying on a guarantee signed years ago, the ten minutes it takes to read it again, and to check it was written to survive both the move to a periodic tenancy and a rent increase, may be the most useful ten minutes you spend this year.

I would be interested to hear from anyone who has actually tried to enforce a guarantee after a rent increase under the new system, or who has had the periodic transition argument run against them. Has anyone had a guarantor try to walk away on the back of Holme v Brunskill? And for the letting agents here, have you redrafted your guarantee deeds since 1 May, and if so, how?

**

Tauhid Islam is a property law paralegal qualifying as a solicitor. He works on tenancy, possession, and compliance matters daily, and founded LLCR, Landlord Compliance Register, to give self-managing landlords in England a single place to track every deadline, certificate, and document the law requires of them.

This article is for informational purposes only and does not constitute legal advice. Always seek independent legal advice for your specific situation.

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Landlords — when the road ahead feels confusing or uncertain, find a path you can trust

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Property118

Landlords — when the road ahead feels confusing or uncertain, find a path you can trust

The private rented sector is changing at a pace few landlords have experienced before.

Landlords are being asked to accept pets they might previously have refused. The government is warning against blanket policies affecting benefit claimants. Councils are preparing to issue significant fines for compliance failures. Ministers have had to correct guidance issued only weeks earlier. Questions remain about future taxation, EPC requirements and the cost of complying with new regulations.

Landlords are increasingly reporting in the Property118 comments section that they feel overwhelmed by the pace of change.

From tax reforms and compliance obligations to evolving tenancy rules, many describe the sector as confusing, bewildering and increasingly difficult to navigate, while industry bodies have warned that some landlords are finding the volume of new regulation overwhelming.

For landlords who intend to remain in the sector for the long term, professional support is becoming more important than ever. Many industry experts now recommend using a good letting agent to help navigate compliance obligations, changing legislation and the growing administrative burden. For those committed to building and managing rental portfolios for years to come, that advice may well make sense.

However, not every landlord wants to become more heavily involved in an increasingly regulated business. Accidental landlords, older landlords approaching retirement, those with smaller portfolios of one to five properties, and landlords whose margins are being squeezed by rising costs may be asking a different question entirely: where do I begin if I want to leave?

If that sounds familiar, begin by speaking to Landlord Sales Agency. Whether you’re looking to sell one property, part of a portfolio or make a complete exit from the sector, our team can help you navigate what can often feel like a complicated process.

We provide clarity when others see confusion, practical solutions where others see obstacles, and a clear route forward when the road ahead feels uncertain.

Leaving the sector is often far more complicated than many landlords expect – especially when there are tenants to consider, compliance issues to address, paperwork to gather, valuations to obtain and decisions to make about whether properties should be sold tenanted or vacant.

Simply working out where to start can feel like another challenge in itself.

That’s where we come in. As portfolio exit specialists, we manage the entire process from start to finish and we solve any and every problem if there is one – whether that is a problem with the property, a problem with the tenants (maybe they have been advised to sit tight by the council?) or a compliance issue or below-market rents we tailor our solution around your needs. Our job isn’t simply to sell your property. It is to achieve the best possible outcome for your particular circumstances. To give sellers clarity.

We liaise with tenants, gather the information buyers need, overcome issues that might otherwise delay a sale and connect properties with our network of more than 30,000 landlord and investor buyers.

In many cases, we sell properties without disturbing tenants, removing the need to navigate lengthy possession procedures altogether.

Where vacant possession is required, we often work with tenants to help them secure alternative accommodation, allowing landlords to move forward without unnecessary conflict or delay.

In other cases, our buyers are so confident with our process, they don’t even need a viewing to buy.

Whether you own one property or a large portfolio, and whether your property is need of repair or in pristine condition ready to sell as a turnkey business, we can help you find the right buyer for all your properties and needs.

A clear path to a reliable sale

Our approach delivers results. Most portfolios we market are sold in less than 28 days, and tenanted properties typically sell for 85–90% of vacant possession value without the costs, delays and uncertainty associated with traditional sales routes.

Buyers pay a non-refundable deposit as soon as a sale is agreed and we do everything we can to ensure sales complete as close as possible to tenants vacating the property so sellers do not lose months of rent or have to run empty property for prolonged periods.

There’s no one like us out there, and we’ve built up an unbeatable record for helping landlords which is why we’re the number one go-to company for our partners, including Property118

We understand ALL the challenges landlords face because Landlord Sales Agency was founded by landlords and is a first-class service for landlords.

So if you want a simple path to a fast, reliable sale, get in touch with Landlord Sales Agency today. We’ll tell you exactly what we can do before we do it and before we ask you to sign anything so if you don’t think it’s the right fit for you, then simply walk away.

Contact us today to get you where you want to go quickly, safely and reliably.

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Government claims tribunal rent system protects tenants from arrears

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Government claims tribunal rent system protects tenants from arrears

The government has claimed that tribunal-determined rents will protect tenants from falling into rent arrears.

In a Parliamentary written question, Independent MP Iqbal Mohamed asked whether landlords should be required to notify councils and the Department for Work and Pensions when a First-tier Tribunal finds a tenant has been overcharged rent.

The government has announced a £47 fee for tenants challenging a rent increase through the first-tier property tribunal.

Protect tenants from falling into rent arrears

In response to Mr Mohamed’s question, housing minister Matthew Pennycook claimed mechanisms are in place to support tenants.

He said: “Where a tenant challenges a proposed rent increase at the Tribunal, any rent increase will be payable only from the start of the next rent period following the date of the Tribunal’s determination.

“This means that, in such circumstances, if the Tribunal determines a rent level below what the landlord proposed, the landlord will not have received any rent above the level determined by the Tribunal. This is intended to protect tenants from falling into rent arrears.”

Landlords left in limbo

However, as previously reported by Property118, critics argue the same mechanism could encourage tenants to challenge rent increases simply to delay higher payments.

The mechanism would mean that even unsuccessful challenges could delay higher rent payments for months, leaving landlords in limbo.

Geoffrey Vos, Master of the Rolls and head of civil justice in England and Wales, warned the Housing Law Practitioners’ Association that the rules under the Renters’ Rights Act could create “an incentive for tenants to apply to the First Tier Tribunal in respect of every increase in order to delay its implementation”.

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Section 24, the Axe the Tenant Tax campaign and what we know ten years later

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Section 24, the Axe the Tenant Tax campaign and what we know ten years later

Almost ten years have passed since the Axe the Tenant Tax campaign sought permission to challenge Section 24 by way of judicial review.

The campaign attracted considerable support from landlords across the country and was represented by leading counsel. The argument was straightforward. Individual landlords were being denied relief for finance costs while companies continued to deduct those same costs in full. Many believed that was discriminatory and that it should therefore be struck down.

The courts disagreed.

Permission for judicial review was refused and Section 24 has remained part of the tax landscape ever since.

That could easily be the end of the story, but I don’t think it is.

Looking back

With the benefit of hindsight, I believe many landlords were asking the wrong question.

The campaign understandably concentrated on whether Section 24 itself was lawful. Parliament is generally entitled to decide how different taxpayers are taxed. Individuals and companies have always been subject to different tax rules and the courts are understandably reluctant to interfere with political decisions on taxation unless there is a very clear legal basis for doing so.

In that respect, the outcome was perhaps not surprising.

The fact that a policy appears unfair does not necessarily make it unlawful.

What Section 24 did achieve

Ironically, Section 24 may have achieved something its architects never intended.

Rather than forcing landlords to sell, many began looking at their businesses in a completely different way.

Some sold properties and reduced borrowing.

Some changed investment strategies.

Others concluded that incorporation provided a better long-term structure for their business.

Thousands of landlords also began treating their portfolios more commercially than ever before. Cashflow, return on equity, succession planning and business continuity became mainstream discussion points instead of afterthoughts.

That cultural change within the sector may prove to be one of Section 24’s most lasting legacies.

The legal landscape has also evolved

Since the judicial review was refused, the courts have continued to consider what constitutes a property business in a variety of tax contexts.

Those decisions have not changed the legality of Section 24. They have, however, provided greater clarity on how property businesses should be analysed and have highlighted that the concept of a “business” is far more nuanced than many people previously assumed.

That matters because tax legislation should operate consistently. Where Parliament uses the same language across different parts of the tax code, there is a legitimate expectation that similar activities will generally be analysed using similar legal principles, and those debates are continuing.

Would the challenge be different today?

Possibly.

Not because Section 24 has suddenly become unlawful, but because the questions landlords are asking have changed.

The conversation is no longer simply about whether landlords should be taxed differently from companies. It is increasingly about how genuine property businesses should be recognised, how tax legislation should be applied consistently, and whether HMRC’s published guidance always reflects the law as interpreted by the courts.

The real lesson

Looking back, I don’t think the Axe the Tenant Tax campaign was a waste of time; far from it because it united landlords, raised awareness of the issues and encouraged thousands of people to think more strategically about their businesses.

It also demonstrated that challenging government policy through the courts is difficult. Parliament writes tax law. Unless legislation breaches fundamental legal principles, judges will usually leave policy decisions to elected politicians. That remains true today, so the lesson for landlords is not to hope that Section 24 will disappear, it is to understand the legislation that exists, structure their affairs appropriately and make informed commercial decisions based on today’s tax system rather than yesterday’s.

That is ultimately where successful property businesses have focused their attention over the last decade, and I suspect they will continue to do so for many years to come.

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The UK’s short-let guest nights exceed 100 million

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The UK’s short-let guest nights exceed 100 million

Landlords operating short-let accommodation saw demand rise across every UK country and English region during 2025.

Figures from the Office for National Statistics (ONS) show that guests spent 100,911,620 nights that were booked through online platforms last year.

That was 11.5% more than the 90,507,070 guest nights recorded between January and December 2024.

Wales posted the strongest growth among the four UK nations, with guest nights increasing by 17.4%, from 6,282,250 to 7,374,780.

Call for PRS parity

Propertymark’s chief executive, Nathan Emerson, said: “The latest ONS data highlights the continued growth of short-term lets but also reinforces concerns about the impact they can have on the supply of homes available in the private rented sector.

“While short-term lets support tourism and local economies, an increasing number of properties being diverted from long-term rental use can reduce housing availability and place further pressure on affordability, particularly in high-demand areas.”

He added: “These figures demonstrate the need for local authorities to have access to robust data and appropriate powers to address imbalances where short-term lets are affecting housing supply.

“Propertymark continues to call for greater parity between the short-term lets sector and the private rented sector, ensuring communities can benefit from tourism without compromising access to homes for local residents.”

Where stays grew

England’s short lets recorded an 11.1% rise, Scotland was up 10.9% and Northern Ireland had the smallest increase at 10.8%.

January remained the quietest month, accounting for 4,344,890 guest nights, or 4.3% of the annual total.

Even so, the January figure was 19% higher than the 3,651,460 guest nights recorded during the same month in 2024.

August was the busiest month, with 14,143,560 guest nights. This represented 14% of the 2025 total and an increase of 10.6% from 12,788,560 a year earlier.

Regional increases

March was the only month to record a fall in stays, with guest nights dropping by 5.9%.

April, however, registered the largest increase at 29.3% with the timing of the Easter holidays affecting the comparison.

Every region recorded an increase in guest nights during 2025.

The North East had the largest percentage rise, climbing by 22.2% from 2,253,220 guest nights to 2,753,800.

London remained the region with the highest volume, recording 21,557,480 guest nights. That was up 6.3% from 20,270,590, the smallest regional increase.

Where visitors come from

North Yorkshire recorded the largest numerical increase among local authorities, adding 452,960 guest nights, a rise of 20.5%.

Cornwall followed closely, with an additional 449,450 nights, representing growth of 13%.

Brighton and Hove recorded the largest fall, with guest nights declining by 35,900, or 3.7%.

Visitors from within the UK accounted for 67.2% of guest nights in 2025.

The United States remained the largest source of international guest nights, contributing 6,214,210 during the year.

Germany was second with 3,032,410, followed by France with 2,600,090.

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Has the Upper Tribunal exposed a flaw in HMRC’s guidance on landlord incorporation relief?

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Has the Upper Tribunal exposed a flaw in HMRC’s guidance on landlord incorporation relief?

One sentence in HMRC’s Capital Gains Manual has probably influenced more landlord incorporation decisions than any other. It appears in CG65715 and says:

“You should accept that incorporation relief will be available where an individual spends 20 hours or more a week…”

For many, that sentence has become the starting point for every discussion about section 162 incorporation reliefn and for some, it has become the finishing point as well. Landlords are frequently told that unless they can demonstrate around twenty hours each week managing their portfolio, incorporation relief is unlikely to be available. In many cases, that conclusion is reached before anyone has taken a step back to ask the question Parliament actually posed.

The legislation does not ask how many hours a landlord works; it asks whether there is a business.

That distinction has always mattered, but it may matter even more following the recent Upper Tribunal decision in HMRC v GCH Corporation Ltd and others. Although the case did not concern residential property or section 162 incorporation relief, it did require the Tribunal to consider exactly the same statutory word that lies at the heart of incorporation relief: “Business”.

Parliament did not distinguish between residential property businesses, commercial property businesses, investment businesses or trading businesses. It simply used the word “business” and left it to the courts to determine what that meant, and that’s why the case of GCH Corporation deserves careful attention from anyone advising landlords.

The starting point, however, remains Elisabeth Moyne Ramsay v HMRC. Mrs Ramsay happened to spend around twenty hours each week managing her portfolio and the Upper Tribunal concluded that she was carrying on a business. HMRC quite reasonably reflected those facts in its published guidance, but what is less clear is whether, over time, that guidance has gradually come to be treated as though it represents the legal test itself rather than HMRC’s interpretation of one particular case.

The judgment itself is rather more nuanced.

Judge Berner did not say that twenty hours represented the statutory threshold, nor did he suggest that nineteen hours would fail or that every landlord seeking incorporation relief must personally undertake a prescribed level of activity. Instead, he explained that “it is the degree of activity as a whole which is material”. Those final four words are often overlooked, yet they arguably contain the most important principle arising from the decision.

The emphasis was not on one particular piece of evidence; it was on the business viewed as a whole, and that brings us to GCH Corporation.

The case concerned an LLP whose activities involved acquiring, holding and disposing of investment assets, including shares and loan notes, with a view to making profits. The Upper Tribunal had little difficulty concluding that the LLP was carrying on a business. More interestingly, it reached that conclusion without undertaking the sort of analysis that many landlords have become accustomed to seeing in section 162 discussions.

The judgment contains no detailed examination of how many hours the LLP members personally devoted to the business, or that engaging professionals somehow weakened the existence of the business. In fact, there was no attempt to separate work undertaken personally from work carried out on behalf of the LLP at all. Instead, the Tribunal looked at the commercial reality of what the LLP was doing and concluded that it was carrying on a genuine investment business with a view to profit, and that immediately raises an interesting question.

If an LLP investing in shares and loan notes can constitute a business without analysing the members’ personal hours, why should the legal analysis become fundamentally different simply because the investment assets happen to be residential property?

Consider two simple examples.

The first is the LLP in GCH Corporation. Its assets comprise investments in shares and loan notes, professional advisers are involved, and the members make strategic decisions, oversee the investments and seek to generate long-term profits. The Upper Tribunal concluded that the LLP was carrying on a business.

Now consider a landlord LLP owning just two residential investment properties. A professional managing agent advertises the properties, references tenants, collects rents, arranges repairs and deals with day-to-day administration. The members oversee the business, approve significant expenditure, review financial performance and make strategic decisions about the future of the portfolio.

Both LLPs exist to generate investment returns.

Both hold investment assets.

Both delegate much of the day-to-day administration to professionals.

Both are carried on with a view to profit.

The obvious question is why one should readily be accepted as carrying on a business while the other is often subjected to an entirely different line of enquiry.

That is not a question answered by GCH Corporation, because it was not a section 162 appeal. Equally, it is not a question answered by Ramsay. What GCH Corporation does do, however, is reinforce the principle that the statutory concept of “business” should be approached by examining the commercial reality of the activities undertaken. It does not suggest that investment businesses should somehow be divided into different categories depending upon the type of investment they happen to hold, and that’s where HMRC’s published guidance becomes particularly interesting.

CG65715 undoubtedly reflects the factual circumstances of Ramsay, but does it now place greater emphasis upon one aspect of the evidence than the Upper Tribunal itself intended? Has the twenty-hour example gradually become the focus of the analysis when Judge Berner’s actual conclusion was that “it is the degree of activity as a whole which is material”?

Those are not merely academic questions.

HMRC’s manuals influence the professional advice given to landlords every day. They influence whether landlords decide to incorporate, whether claims are made and, in some cases, whether opportunities are dismissed without any detailed consideration of the business itself. If the Upper Tribunal is now continuing to analyse the statutory concept of “business” by reference to commercial reality rather than personal hours worked, it is reasonable to ask whether the guidance should evolve to reflect that approach more clearly.

None of this means that GCH Corporation has rewritten section 162 or overturned Ramsay. Nor does it follow that every landlord with a small portfolio will qualify for incorporation relief. The availability of relief will always depend upon the particular facts of each case, but what the decision does achieve is something potentially just as important.

It reminds us that the starting point should always be the legislation itself. Parliament asked whether there was a business. It did not ask how many hours the owner worked or distinguish between residential investment businesses and other forms of investment business. It simply chose the word “business”, and the Upper Tribunal has now considered that word on more than one occasion.

Whether HMRC ultimately decides to revisit CG65715 remains to be seen, and likewise, whether future courts draw a sharper distinction between residential property businesses and other investment businesses. What is much harder to ignore is that the latest Upper Tribunal decision has reopened a debate that many advisers may previously have regarded as settled.

Perhaps the time has come to stop asking whether a landlord worked twenty hours each week and start asking the question Parliament asked all along; is there a business?

What does this mean for your own property business?

If nothing else, the recent case law serves as a reminder that no two property businesses are identical and that important decisions should never be made by reference to rules of thumb alone. Whether incorporation is appropriate depends upon the commercial reality of the business, the long-term objectives of its owners and the wider legal and tax consequences of restructuring.

That is why Property118 begins every consultation by understanding your business before discussing possible solutions. Whether your objectives involve improving cashflow, planning for retirement, succession planning, refinancing flexibility or incorporation, our advice is tailored to your circumstances rather than assumptions based on portfolio size or perceived benchmarks.

If you would like an independent assessment of your own property business, together with clear advice on the commercial and tax implications of the options available, book a confidential one-to-one consultation with an experienced Property118 consultant. One conversation could provide the clarity needed before making one of the most important decisions affecting your property business.

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