Upcoming Changes for Short-Term Holiday Lets: Why It May Be Time to Consider Long-Term Residential Letting

As we approach significant shifts in legislation targeting short-term holiday let property owners, it’s an opportune moment to reflect on the future of your property investment. The UK Government has announced sweeping changes that will affect how holiday lets are taxed and regulated. At RA Flatt Letting Agents in Cheltenham, we believe these changes could present a compelling reason to transition your property from short-term holiday letting to more stable, long-term residential letting.

Here’s what you need to know about the upcoming changes, their impact on holiday let owners, and why the long-term rental market might now be a more attractive option.

What Changes Are Happening?

The Government is introducing stricter regulations and tax reforms to ensure holiday let properties contribute fairly to the economy. Key changes include:

Tougher Criteria for Business Rates

From April 2025, properties advertised as holiday lets will need to meet more stringent occupancy requirements to qualify for business rates rather than council tax. Specifically:

Properties must be let for at least 105 days per year (up from 70 days).

The property must be available for letting for a minimum of 252 days annually (up from 140 days).

This move is designed to tackle owners who exploit business rates relief without genuinely operating as a commercial holiday let.

Reduction in Tax Benefits for Furnished Holiday Lets (FHLs)

Currently, FHLs enjoy favorable tax treatment, such as capital allowances and reduced rates of Capital Gains Tax (CGT). However, changes in 2025 will limit these benefits:

Stricter definitions for qualifying as a furnished holiday let.

A potential increase in CGT for properties no longer meeting FHL criteria.

Compliance with Local Licensing and Planning Regulations

Many local authorities, including in popular tourist hubs, are considering or have implemented licensing schemes to regulate short-term lets. This adds an extra layer of complexity and cost for property owners.

The Impact on Holiday Let Owners

These changes are likely to increase the administrative burden and reduce profitability for many holiday let owners. For example:

Higher Operational Costs: Meeting the increased occupancy threshold could lead to higher marketing and management costs, especially if your property is in a less popular location or experiences seasonal demand fluctuations (and which don’t in the United Kingdom).

Reduced Tax Efficiency: The removal or restriction of tax benefits for FHLs may significantly impact your annual returns.

Regulatory Complexity: Local licensing schemes and compliance with occupancy rules will require more attention, time, and resources.

For many owners, these changes may erode the advantages of short-term holiday letting, making the model less financially appealing.

Why Consider Switching to Long-Term Residential Letting?

In light of these changes, transitioning your property to the long-term residential market could provide a more stable and profitable alternative. Here’s why:

Steady Income Stream

Unlike holiday lets, which are seasonal and subject to market fluctuations, long-term lets offer a consistent monthly rental income. This stability can make financial planning easier and reduce the risks associated with void periods. Also with supply being so tight in the rental market at present any voids are likely to be few and far between and relatively easy to fill.

Reduced Administrative Overhead

Managing a long-term let is generally less time-intensive. You won’t need to handle frequent bookings, cleaning, or marketing. Partnering with a letting agent like RA Flatt ensures even greater convenience, as we manage tenant selection, contracts, and property maintenance on your behalf.

Increasing Demand for Rental Properties in Cheltenham

The rental market in Cheltenham is thriving, with high demand for quality residential properties. The growing population, excellent schools, and strong employment prospects in the area make it an ideal location for long-term tenants. This demand ensures competitive rental yields for landlords.

Is Now the Right Time to Switch?

The upcoming changes to holiday let legislation, coupled with the rising popularity of the rental market, make now an excellent time to consider long-term letting. By acting early, you can:

Avoid potential penalties or financial losses associated with failing to meet new holiday let regulations.

Secure reliable tenants in a competitive rental market.

Benefit from professional support by partnering with experts like RA Flatt, who understand the local market and can help you maximize your property’s potential.

How RA Flatt Can Help

At RA Flatt Letting Agents in Cheltenham, we specialize in helping landlords navigate the complexities of property letting. Whether you’re considering transitioning from holiday letting to long-term renting or exploring your options, our team provides tailored advice and comprehensive management services.

We ensure your property achieves its full potential while keeping you compliant with the latest regulations. From marketing and tenant screening to ongoing property maintenance, we handle every detail, giving you peace of mind.

The forthcoming changes to holiday let regulations mark a turning point for property owners. While short-term letting has been lucrative for many, increased regulations and reduced tax benefits are reshaping the landscape. Switching to long-term residential letting offers stability, simplicity, and the opportunity to capitalize on a thriving rental market in Cheltenham.

To explore your options and receive expert guidance, contact RA Flatt Letting Agents today. Let’s help you make the most of your property investment in these changing times.

If you’d like to discuss your property’s potential or need advice on transitioning to long-term letting, get in touch with our team – we’re here to help you every step of the way.