How to run a Holiday Let

Jack McClureJack McClure
Last updated on:
January 24, 2022
Published on:
November 9, 2021

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If you are considering running a holiday let or bed and breakfast, there are many ways to do so, but with careful planning and by thinking of safety and legals first, issues can often be avoided. Whether you're a holiday cottage owner, holiday letting agency or a landlord generating rental income from a second home on airbnb, this article will explain what legals and practicalities holiday let owners need to cover to run a successful holiday let.

What is defined as a holiday let?

The law distinguishes its treatment of “furnished holiday lets” (FHL) with typical renting arrangements. Holidaymakers are excluded from the protections granted under the Housing Act 1988. This means that they have no “security of tenure” and must leave the holiday rental at the end of the fixed term stay. There are various tax benefits which come with collecting holiday rent rather than typical rent. Landlords are entitled to Capital Gains Tax reliefs for traders (Business Asset Rollover Relief, Entrepreneurs’ Relief, relief for gifts of business assets and relief for loans to traders), plant and machinery capital allowances for items such as furniture, equipment and fixtures, and all profits count as earnings for pension purposes. However, there are requirements for the letting to be classed as an FHL. HMRC defines the maximum length of an individual holiday to be 31 days. If the total of all lettings that exceed 31 continuous days is more than 155 days that year, your property will not be considered a FHL for tax purposes. Moreover, the property has to be available for letting as furnished holiday accommodation for at least 210 days in the year. You also must let the property commercially as furnished holiday accommodation to the public for at least 105 days in the year.

What do I need to do to run a holiday let business?

As a preliminary, it is best to make sure that you’re allowed to use the property as a holiday let. Check the land registry or leasehold agreement to make sure that there are no restrictive or occupancy covenants for your potential holiday let property. For example, leaseholds in converted manor houses often contain restrictions against holiday letting as not to allow strangers in close proximity to other residents. It is also worth exploring whether you require planning permission from the local authority for a “material change of use” given that you are planning to offer temporary sleeping accommodation in a residential property. Since your business may very well collect and process guests’ personal information, you need to register with the Information Commissioner’s Office (ICO). Ensure that any data you process is GDPR compliant.

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What are my obligations as a holiday let landlord?

There are various health and safety standards your property has to maintain. It is your duty of care under statute to ensure you have a gas safety certificate, and have all gas appliances checked between 10-12 months from the date of the last check by an engineer. There is also a duty to make sure all electrical installations in your holiday properties are safe. As of 2020, all electrical fixtures have to be inspected and tested by a qualified electrical engineer every five years. Landlords are required to carry out a fire safety risk assessment, which can be self-conducted, though you can hire a fire consultant. Make sure there are carbon monoxide alarms in every room with an over/boiler or burner. You should perform additional health and fire risk assessments if your holiday let offers a hot tub or has an open fire.

What else might be desirable?

One thing to consider taking out is specialist insurance for holiday lets. This will normally cover buildings and contents insurance; the same things as a standard home insurance policy. However, this might also provide cover for holiday homes that are empty for more than 30 consecutive days; cover for friends and family as well as paying guests; and public liability cover if you let out your holiday home to paying guests. Moreover, if you have a holiday let and want to give your guests TV, you will need to apply for a separate licence. Another top tip when taking on new guests, is to provide them with a welcome pack detailing the rules of the property as well as information on the local area to help them make the most out of their own holiday.

Find out more about Legislate’s guide to creating holiday let agreements. Legislate is a contracting platform where you can create easy-to-understand and legally valid agreements on your own terms. You can read how to create your first Legislate agreements in our tutorial or watch a short demo. If you would like to try Legislate, please sign up or book an introductory call.

The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.

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