Holiday home owners top the rental income chart

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The average annual holiday let income exceeded buy-to-let income for the first time in 2020-21, reaching £15,600 compared with £13,400, according to HMRC.

Ten years ago, holiday lets generated about £9,600 a year compared with £12,800 for buy-to-let but the gulf has grown wider, pushing holiday let income up by an average of 63% in the past decade compared with just 5% for buy-to-let.

Available data

A Freedom of Information request by Hamptons reveals that 63,000 individuals (rather than a company) received income from 65,000 furnished holiday let properties in the UK according to the latest available data — up from 46,000 receiving income from 50,000 properties in 2011-12.

It also wanted to test the theory that some longer-term landlords had moved across to the short-let market because it was more lucrative. The results show that while some have, the numbers are still fairly small – just 1.5% of all landlords are also holiday let owners, up from about 1.3%.

However, the figures will no doubt fuel critics’ argument that investing in holiday properties is driving up prices in rural hotspots and creating a chronic shortage of rental properties. Six mostly Labour MPs are sponsoring an Early Day Motion that would establish a Short Term Holiday Let Licensing Scheme across England.

Business rates

For a property to qualify as a self-catered holiday let in England – let for at least 70 nights a year and available for at least 140 — owners can switch from paying council tax to business rates. However, if their annual business rates bill is less than £12,000 and they only rent out one property, they pay no tax.

David Fell, a senior analyst at Hamptons, says the number investing in holiday lets rose dramatically during the pandemic because so many more people were confined to staycations as a result of international travel restrictions. “While Covid undoubtedly distorted the market, the longer term upward trend in revenue predates Covid, and it’s a trend the government has been increasingly worried about,” he adds.

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