Almost half (48%) of holiday let owners say profits have risen despite the loss of Furnished Holiday Let tax breaks - although some are cutting down on maintenance to make the numbers work.

Cumberland Building Society research found that 30% recorded a fall in profits after the FHL tax changes. In response, 47% increased their nightly rates, while 46% increased their occupancy and 34% reduced maintenance or capital expenditure.

The government abolished the FHL tax regime in April 2025 so that FHL income and gains are now taxed just like ordinary long-term residential property income.

The lender, which based research on mortgage brokers, private landlords and homeowners who own at least one holiday let property across England, Scotland and Wales, believes the findings might simply reflect a more measured approach to expenditure rather than unnecessary spending. However, it warns that higher operating costs could also mean some owners are delaying investment in their properties, which could become more challenging over time if maintenance standards begin to slip.

Proposed

A proposed C5 planning use class - currently being considered by the government - would create a separate planning category for short-term holiday lets, giving local authorities greater control over where new holiday let properties can be set up. However, the research reveals that if that happened, 56% of investors would consider selling up.

It also found that with 86% reporting gross yields above 5%, 30% plan to buy another holiday let in the next year. According to the research, 88% of brokers interviewed reported an increase in holiday let enquiries over the past 12 months.

Years

Given everything the holiday let sector has experienced over the past few years, it would have been easy to surmise that investor confidence had fallen sharply, says Grant Seaton, head of intermediary lending, (pictured above). “What our research actually revealed was a much more nuanced picture, with several findings that challenged some of the assumptions surrounding the market.

“Increasingly, we’re seeing investors treat them as long-term businesses, placing greater emphasis on occupancy, guest experience and sustainable income rather than relying solely on rising property values.”

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