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Airbnb operators will no longer receive tax benefits for private landlords to rent out properties for sale, as the Chancellor has chosen to abolish the Furnished Holiday Lets scheme.
The measure is expected to take effect from April 2025, during which time anti-forest regulations will be introduced to prevent unconditional contracts from being used to secure certain tax benefits.
Mr Hunt said: ‘I am concerned that this tax system is creating distortions and that there is a lack of long-term rental properties for local residents.
“So to make the tax system work better for communities, I will abolish the furnished holiday home system.”
There have long been concerns that the current situation is eroding the identity of communities like the Lake District, which attract so many tourists.
Rebecca Wilkinson, property and construction sector specialist and business tax partner at UK business advisory and accountancy firm Menzies LLP, said: ‘As far as the property sector is concerned, the most high-profile announcement in the Spring Budget was This means abolishing attached housing.” Holiday Lettering (FHL) system. The FHL system has been around for many years and offers a variety of tax benefits to individuals and businesses who rent out furnished properties as holiday rentals.
“In recent years, there has been a significant increase in the number of landlords offering furnished holiday homes. This is partly due to the Section 24 interest limitation rules, which prevent private landlords from receiving full tax relief on mortgage interest. Residential leases are subject to the Article 24 interest limitation rules, but FHL offers are not, making this business model much more attractive from a tax efficiency perspective .
“The rise of AirBnB has also made it much easier for landlords to market their properties as holiday properties, and demand for holiday accommodation in the UK has increased since Covid-19. For landlords, shifting business models has become an attractive option.
“The problem is that the conversion of properties into holiday rental properties is reducing housing stock and pricing residents out of the market in some popular tourist destinations. It believes it will “make the property tax system fairer and more efficient” and “level the playing field between short-term and long-term rentals, helping people live locally.”
Andrew Norton and Phil Blackburn, partners and business advisors at Lubbock Fine Chartered Accountants, said: “The abolition of the Furnished Holiday Lets scheme is a step towards encouraging landlords to buy to get them to sell. There is,” he said.
“Holiday stays have grown in popularity over the last decade with the rise of platforms like Airbnb, but the growing number of such properties may come at the expense of local residents’ ability to get onto the property ladder. It happens often.”
Liam Monaghan of Prime London’s purchasing and investment agent, London Central Portfolio, is pleased with the move.
He said: “Currently, tenants are effectively losing their homes to tourists, so aligning the market with owners benefiting from the holiday let tax relief will be positive for the long let market. Probably.” It is now more tax efficient for owners to rent out their properties on shortlet platforms such as Airbnb. In high tourism areas like London, more properties are becoming available for this type of rental, meaning they are removed from the general long-term rental market. .
“The proposed changes should encourage these investors to return to the longlet market, thereby increasing much-needed supply. With rents rising ahead of inflation, There is clearly great demand from tenants for long-term rental properties. Tenants are also offering landlords a year’s worth of rent in order to secure a property over others.”