Budget 2024: The Holiday-Let Losers
In what the Chancellor described as a ‘long term budget for growth’ it was predicted that the headline grabbing National Insurance cuts and improvements to child benefit would be paid for by holiday-let landlords.
Where elsewhere the Chancellor supported tourism, ‘the great British pub’ and the national arts, landlords of furnished holiday lets will feel let down.
Jeremy Hunt announced during his Spring budget that he will be scrapping what is thought to be £300m tax breaks for holiday let owners with the intention that the £300m would be used to part-fund the national insurance cut of 2p.
What does this mean for owners of holiday lets?
Currently, owners of holiday lets can claim capital gains tax reliefs, plant and machinery capital allowances while, profits earned can count as earnings for pension purposes. This is seen as an incentive to own holiday lets.
Some may say that owners of holiday lets will contribute towards the current housing shortfall by being ‘forced’ to sell their holiday lets, by freeing up properties for first time buyers and giving them an opportunity to get onto the property ladder.
How will the property industry react?
Holiday lets have been source of income generator for the UK, where people and families both living in the UK and from abroad are encouraged to visit parts of the UK for a short-term break and thereby increasing UK tourism with the goal of increasing the country’s GDPR.
If owners are forced to sell up their holiday lets, this will have a negative impact on thriving touristy towns in the UK, surely this is not the intention of the Government?
The Government has already clamped down on short term holiday let market by the introduction of a licensing regime by the Levelling Up and Regeneration Act. The Government’s aim is to ensure that holiday let owners provide good quality, safe accommodation which complies with minimum standards.
Scrapping the tax breaks for holiday-let owners may not be the answer to the property shortfall crisis, particularly if removing holiday lets results in a reduction of tourism, damage to local economies and reduction in jobs. This may again be the Conservative Government failing to appreciate the fragile eco-system of the property market. Ultimately, punishing one set of property-owners will have a knock-on affect the other parts the market.
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