Ban on expats renting holiday homes in the UK

Expatriate property investors who rent their homes overseas face a ban on renting through hotel websites, such as Airbnb and

The measure is part of a comprehensive overhaul of landlord and tenant law in England.

Upgrade and Housing Secretary Michael Gove wants to prevent landlords from switching from long rentals to vacation rentals, which is driving property prices to unaffordable heights in some popular holiday destinations.

Investors are driven by money because vacation rentals can earn them so much more than a buy-to-let.

While the average rent in the UK is £1,103 per month, according to tenant referral company Homelet, holiday rental rents vary depending on property type, location and length of stay. .

No rental without building permit

Owners should expect to earn £21,000 a year from short lets, says booking agent Sykes Cottages, compared to £13,200 a year from a rental purchase.

Research by letting agent trade body ARLA Propertymark found that 46,000 buyers-to-let owners have already switched business models to short-term rentals, and around one in ten are considering making the switch – around 40,000 other real estate investors.

The PMRA also found that owners of five or more rental properties were more likely to accept short-term rentals.

Gove is proposing to amend the Leveling and Regeneration Bill currently pending in Parliament so that only owners with a holiday planning permit can rent their properties. In addition, the Minister wants to give more powers to mayors to limit the number of rentals on their territory.

This is part of the government’s upgrading program by adding to decentralization plans while increasing the powers of local councils.

City votes to ban second homes

“We are taking action to tackle the negative impact second homes can have on local communities – particularly in tourist areas such as Cornwall – by closing tax loopholes, introducing higher stamp duty rates and by allowing councils to apply a tax bonus of up to 100% on second homes,” said a spokesperson for the Department of Upgrading, Housing and Communities.

Five English holiday hotspots are already preparing for the ban.

Voters in Whitby, Yorkshire, voted to ban second homes in the fishing town earlier this year. With 2,111 out of 2,268 voters supporting the ban, although the poll has no official standing.

Whitby’s local authority, Scarborough Council, issued a statement saying: ‘The result of the ballot is no more and no less than an expression of the views of the electorate in the parish who voted on the ballot and does not bind no organization. .”

In Whitby, the average house costs £254,218, well beyond affordability for a local earning an average of £18,900 a year.

Pressure on services

Residents say wealthy foreigners are buying homes in the town because locals cannot pay off their mortgages on their wages, which are £5,700 a year less than the national average wage of £24,600, according to the Office for National Statistics.

Watching the Whitby protest unfold are councilors from St Ives, Cornwall; Salcombe, Devon; Whitstable, Kent and Tideswell, Cumbria. According to property portal Rightmove, Salcombe is the UK’s premier seaside resort. St Ives and Whitstable are also in the top ten.

The problem for municipalities is the services and budgets for second homes.

Second homes and vacation rentals are only occupied part of the year, leaving communities like ghost towns during the winter months. They also impact the number of schools, health care and infrastructure, such as stores with fewer to manage.

Moves are underway to double council tax on second homes in England and triple the rate in Wales.

Tax relief for holiday homes

Vacation rental owners may apply to pay business rates instead of council tax. Due to the taxable value of most vacation rentals, they do not pay any rate or council tax due to the relief offered by the government.

This reduction in funds has a negative impact on municipal budgets.

As a result, Gove intends to make vacation rental qualification more difficult for investors. It calls for vacation rentals to be available 140 days a year and to be rented to paying customers for 70 days if owners wish to claim business rate relief.

The aim is to prevent second home owners from pretending their properties are vacation rentals to claim tax breaks.

Similar rules are in place for Scotland and Wales.

Cornwall Cornwall has one in five holiday homes in the UK

Low wages, rising house prices and broken communities add to the discontent of locals living in popular vacation areas.

Cornwall Council has released data to bolster its case for banning holiday lats.

For example, the county is home to 1% of the UK population but hosts 17% of the country’s holiday homes.

Of 12,776 properties listed as second homes, 11,000 are registered to pay business rates instead of council tax, but 8,953 are eligible for rate relief and pay nothing to the council. Only one in five accommodations in some popular holiday villages is occupied all year round.

Second Home and Vacation Rental FAQs

What is the difference between a secondary residence and a seasonal rental?

A second home is an additional property owned and used by a person with a primary residence elsewhere and occasionally rented out to paying guests. A vacation rental is a commercial property that is rented to paying customers. Both are short-term rentals, meaning guests stay for less than 31 days.

Yes, it is legal to own a house and one or more additional properties. However, if the houses are let, the rules are slightly different depending on whether the property is in England, Scotland or Wales.

What are Gove’s planning permission rules?

The Housing Secretary has yet to reveal how he will change the Leveling and Regeneration Bill, but expects a law similar to London’s. There, owners can rent a property short-term for up to 90 days a year. Longer than that, and they have to apply to the local council for planning permission to change the use of the property to a rental business.

Is Gove planning an Airbnb ban or a rental ban?

Gove is proposing to ban claiming to rent a property as a vacation rental in a bid to eliminate the bogus claim for tax breaks. His second home projects are either a vacation rental business or not.

Tax breaks will follow if the property is deemed a bona fide stay.

Gove does not ban Airbnb or any other hotel site, but does prevent landlords without planning permission from advertising.

Can I avoid tax on a second home?

No. Any profit made on the sale of a second home is subject to Capital Gains Tax (CGT) if it exceeds the annual exempt amount of £12,300.

Should I stop renting a second home?

No. The new rules don’t mean an investor has to stop renting or giving up a second home. The measure aims to provide residents with more affordable housing by making the operating costs of a second home more expensive for owners.

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