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Latest News Holiday lets – your FAQs answered
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Holiday lets – your FAQs answered

Holiday lets – your FAQs answered

Holiday lets can be a good income stream, but there’s a lot to consider when it comes to setting up, and ensuring you meet any legal obligations. We answer some of your most frequently asked questions to help you get to grips with the ins and outs of holiday home letting.

Holiday lets – are they commercial or residential?

Do I need to register my holiday let as a business?

Your holiday let may be classed as a business, depending on how many nights it’s available for hire.

To be considered a business in England, a holiday let must be available to hire for at least 140 nights over the current and past tax years. It must also be actually let for at least 70 nights in the last 12 months. In Wales, it must be available to hire for at least 252 nights and actually let for at least 182 nights in the last year. If this sounds like your holiday let, you should contact your local council about paying Business Rates instead of Council Tax.

In Scotland, holiday lets must be available for at least 140 days in one year and be actually let for at least 70 days. If this is the case, you’ll need to contact your local assessor and arrange to pay non-domestic rates.

Is a holiday let commercial or residential?

Whether your holiday let is classed as a commercial operation or residential home depends on how many nights it’s available for and how many nights it’s actually rented.

If you meet the thresholds set out above, your holiday let will be eligible for Business Rates and be considered a commercial operation.

Is a holiday let classed as an HMO?

A house in multiple occupation (HMO) is where three or more people from different households share a property and communal facilities (like a kitchen, bathroom, or living room). HMOs are also usually the main or only home for those living there. The tenants would also normally have an Assured Shorthold Tenancy (AST) agreement (or another type of tenancy agreement) with the landlord.

Based on this definition, most holiday lets would not be considered an HMO as they’re rented to groups with their own (main) residences and wouldn’t have a tenancy agreement with the property owner.

Can any property be a holiday let?

Potentially, any permanent building could be turned into a holiday let, subject to meeting minimum habitable standard requirements. However, if you have a mortgage on the property you want to let, you’ll need to check the conditions of the loan. A standard mortgage for a residential home is unlikely to be suitable for a property only used as a holiday rental.

You’ll also need to remember that you will need specific insurance suitable for a holiday let – standard home or landlord insurance is unlikely to cover a permanent holiday let. Holiday let or serviced accommodation insurance is designed for the risks associated with allowing guests to stay in your property, and so is more suitable.

You may also need permission to turn an existing residential home into a holiday let or to use the grounds for tents or cabins. For more information about planning permission, look at our guide to holiday let legal requirements.

Setting up a holiday let

Can you change a holiday let to residential?

This will depend on the ‘use class’ of the property, which sets out what it can be used for. In some cases, you may need planning permission to convert the property to a residential let or a permanent residential home.

If you do need planning permission, it’s not guaranteed to be approved. There are some examples of local councils refusing permission to turn holiday lets into permanent homes. Primarily, this is because there are concerns over setting examples which could lead to more holiday lets being converted.

Can a private dwelling be used as a holiday let?

This will depend on a few things. First, you should check the use class of your property to see if any clauses prevent you from using it as a holiday let. If there are, then you may need to apply for planning permission.

Also, you’ll need to speak to your lender if you have a mortgage. Under the terms of your agreement, you may not be allowed to rent your home out in its entirety for any length of time. You should also speak to your insurer to check if your policy will cover you for holiday letting.

Can I use my annexe as a holiday let?

Again, this depends on the use class of the annexe. If any clauses in the property’s deeds forbid its use as a let, then you’ll need planning permission to change this.

Can a limited business purchase a holiday let?

Yes. Limited companies can buy property to use them as holiday lets. That said, it’s important to understand the financial implications, and you should consult a financial adviser if in doubt.

For more advice about setting up a holiday let, including marketing and ongoing costs, head to our guide to renting out a holiday let.

Holiday let regulations and requirements

What building regs apply to holiday lets?

Building regulations apply to most construction work in the UK. If you’re doing any major work to a building (or building from scratch), you should expect building regulations to apply. For example, work that needs to comply with regulations includes:

  • replacing fuse boxes and connecting electrics;
  • bathroom installation with plumbing work;
  • installing a built-in air conditioning system;
  • installing a new heating system.

The good news is that if you hire a professional who can self-certify their work, you won’t need to arrange for separate approval. You can find out more at GOV.UK.

Are holiday lets subject to Council Tax?

If your holiday let meets the threshold for Business Rates, you won’t need to pay Council Tax. If it doesn’t, then you’ll need to pay Council Tax.

If you’re in any doubt, it’s worth speaking to your local council.

Are holiday lets covered by the housing act?

No, the Housing Act 1988 does not cover holiday lets, and guests have no right to reside there when their stay ends.

Does a holiday let need right to rent carried out?

The right-to-rent check is something landlords must carry out on all potential tenants. This is to ensure they have the right to live in the UK.

Holiday home guests are exempt from the right to rent check as long as you are confident that:

  • the let is being used for leisure purposes only;
  • the let is short-term and time-limited;
  • your guests do not intend to stay in the accommodation after their holiday ends.

Do I need holiday let insurance?

You don’t need holiday let insurance by law, but if your property is damaged, it’ll be down to you to cover costs. Plus, if you have a holiday let mortgage, your lender may make it a condition that you have buildings insurance at the very least.

It’s also important to remember that holiday let insurance offers much more than just buildings insurance and can also cover lost income. As holiday lets also need to be fully furnished, it’s worth considering contents insurance to cover the furniture and items you provide.

Policies can also include valuable features such as public liability insurance which covers costs if guests blame you for damage or injury and take you to court.

Protecting your holiday let investment

If you’re thinking about renting out property to holidaymakers, you can find out more in our guide to buying and renting out a holiday let, or check our guide to paying tax on rental income. We can also take you through your holiday let insurance options and design a package of protection that can help safeguard your investment.

To see how we can help, speak to a member of the team on 01603 216399.

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