A call has gone out for the longer-term buy to let rental sector to have a similar tax regime as the largely-unregulated short lets niche.
The National Residential Landlords Association is calling on Chancellor Rishi Sunak to change the tax perks which currently favour Airbnb-style short lets and holiday home lettings.
From April this year the final phase of reducing mortgage interest relief for landlords to the basic rate of income tax will be completed.
This measure does not apply though to furnished holiday lets and, according to the NRLA, this has encouraged the removal of properties from the long-term market for use as short-term holiday lets.
Association chairman Ben Beadle says: “To be taxing long term homes to rent less favourably than holiday lets is simply bizarre. It completely undermines efforts by the government to encourage the provision of long term, secure housing.
“It is time for the government to realise that its tax policies have created a shortage of rented housing. This can only mean higher rents and reduced choice for renters. This is not going to do much for the levelling-up agenda.”
Airbnb hosts famously have few of the regulations to meet that are imposed on buy to let landlords, and they – along with more formal holiday let property owners – have tax benefits too.
Holiday let properties that are considered a ‘furnished holiday let’ and rented out for 105 days or more a year receive a number of allowances and tax reliefs.
You can deduct costs such as mortgage interest and letting agency fees from your pre-tax profit and there may also be tax advantages relating to any capital you spend in kitting out your property.
Furnished holiday let owners may be able to register for business rates which are generally cheaper than council tax, and if the property qualifies for Small Business Rates Relief, owners are treated to a 100 per cent exemption.
This post has originally been featured in Letting Agent Today.