Nearly half of holiday let owners say their profits have increased since the abolition of Furnished Holiday Let tax advantages, new research reveals.
Cumberland Building Society’s inaugural Holiday Let Index finds 48% report increased profitability following the tax changes, while another 19% say profits have remained broadly unchanged.
Owners appear to have responded by changing how they operate their properties, with 47% increasing nightly rates and 46% focusing on improving occupancy.
The research also finds 86% of owners are achieving gross rental yields of at least 5%.
ADAPTING STRATEGIES
The findings come despite changing behaviour among holidaymakers, with 50% of owners reporting more last-minute bookings.
Some 39% have experienced shorter stays, while the same proportion say guests have become more price sensitive.
Among owners surveyed, 44% report gross yields of between 5% and 6%, while 34% are achieving between 7% and 8%. A further 8% put their yields at between 9% and 10%.
Grant Seaton (main picture), Head of Intermediary Lending at Cumberland Building Society, says: “What I take from these findings is that resilience in the holiday let market is not passive. Owners are having to work for their returns.
“They are looking much more closely at pricing, occupancy, finance costs and how each property is run, rather than assuming demand alone will produce a good result.”
EXPANSION PLANS
Despite the tax changes, 61% of owners are positive about future yields, while 30% intend to purchase another holiday let during the next 12 months.
A quarter plan to expand their portfolios.
Seaton adds: “A strong gross yield does not automatically mean a strong business. Two properties producing the same rental yield can have very different outcomes once seasonality, management fees, maintenance, borrowing costs and periods without bookings are taken into account.”
The research was conducted by Pegasus Insight in May among 125 respondents, comprising 50 private landlords, 50 homeowners with a mortgaged holiday let and 25 mortgage brokers.
