Buying a holiday home to let it out? As the owner, it’s important to know and understand the legal requirements for letting your holiday home.
A short-term holiday let is defined as a property which is let out to holidaymakers for brief periods. The property is furnished and is rented out for a few nights up to several weeks. As the owner you’re expected to provide fully furnished, well-equipped, overnight accommodation and adequate services in the property and follow specific guidelines and regulations.
Furnished holiday let tax
A furnished holiday home is subject to different tax laws than a standard buy-to-let property because the government classifies your holiday let as ‘business’ rather than an ‘investment’. Any rental income from a holiday let is subject to income tax and will have to be declared on your annual tax return. However, unlike a buy-to-let property, if you own a furnished holiday home you should be able to offset your full mortgage interest repayments against tax. You should also be able to deduct the cost of furnishing your property from pre-tax profits.
To qualify for furnished holiday let tax your holiday home must meet several criteria:
- You must actively promote your holiday home with the intent of making a profit
- It must be available for commercial holiday letting to guests for at least 210 days (30 weeks) per year
- You mustn’t let out your holiday home to the same person for more than 31 days and there shouldn’t be more than 155 days (+22 weeks) of this type of ‘long term’ occupation per year
- Your property must be rented out as holiday accommodation to the general public for a minimum of 105 days (15 weeks) per year
- Your property needs to be adequately furnished and equipped for guests
Council tax vs business rates
Instead of paying council tax on your holiday home, you will pay business rates which are worked out by the Valuation Office, based on its type, location, size, quality and how much income you are likely to make from it. If you only own one holiday home you’re likely to qualify for small business rate relief where you may not pay any business rates at all.
Gas and electricity
The Gas Safety (Installation and Use) Regulations 1998 outlines the legal duties of self-catering holiday home providers in relation to gas appliances. As a holiday homeowner, you are legally obliged to ensure all appliances and their fittings are safely maintained. As part of this, you’ll need to conduct an annual gas safety check on all your appliances and this must be carried out by a registered engineer.
In terms of electricity within your holiday home, the Electrical Equipment (Safety) Regulations 1994 states that you have a duty of care to ensure all electrical equipment supplied for business use is ‘safe’. Any equipment supplied after January 1995 must be marked with the appropriate CE symbol. There’s no law that says electrical appliances need to be checked every year, rather it’s down to your own judgement.
Currently, there is no requirement for holiday homes to have a Fire Certificate, however, holiday homeowners are obliged under the Regulatory Reform (Fire Safety) Order 2005 (England and Wales), the Fire (Scotland) Act and Fire Safety (Scotland) Regulations 2006, and the Fire and Rescue Services (Northern Ireland) Order 2006 and the Fire Safety Regulations (Northern Ireland) 2010 to undertake a fire risk assessment. You’re also required to improve any safety measures that are identified in the assessment and to keep the risks under review.
You’re responsible for making sure that all upholstered furniture meets the requirements set out in The Furniture and Furnishings (Fire) (Safety) Regulations 1988. The regulations state that all upholstered cushions, pillows, furniture, beds, mattresses, headboards and sofa beds meet the set fire resistance standard.
When you purchase your own holiday home you can’t just get regular home insurance. You’ll need specialist property insurance that covers holiday homes, rather than ordinary buildings and contents insurance. This is because standard home insurance policies usually state that if you’re absent for longer than a set time – such as 30 days in a row – then you won’t benefit from full cover for disasters. This is because an unoccupied home is seen as a bigger risk than a home with people living in it.
Looking to buy a holiday home?
This is by no means an exhaustive list but it gives you a good indication of some of the most important legal regulations when it comes to owning your own holiday home. If you’re thinking about buying a holiday home we have a range of beautiful holiday homes for sale in a range of wonderful holiday parks spread across the UK. Take a look at our range or contact our friendly team for more information about any of our parks or homes.