Following the Spring 2024 budget which brought about changes to the Furnished Holiday Let (FHL) tax regime, holiday let owners are facing challenges to the traditional appeal of owning a holiday let. The government’s move to abolish the FHL tax benefits by April 2025 has prompted a re-evaluation of rental strategies for property owners. The adjustment in policy aims to streamline the tax treatment of FHLs with that of buy-to-let (BTL) properties, impacting owners’ ability to deduct interest on loans at their marginal tax rate.
In this article we present our thoughts on why, as cottages to rent in the Cotswolds are in high demand, holiday let owners should now consider switching to a residential short or long let.
Enhanced Rental Income and Extended Stays
By switching to rent out your property in the Cotswolds via a long or short term let, holiday rental owners have the opportunity to maximise their property’s earning potential. A furnished short term let in the Cotswolds can cater to a broader audience, including professionals seeking temporary housing, families in transition, and wanting to test locations when relocating to the Cotswolds. Many tenants looking for cottages to rent in the Cotswolds desire the comfort of a furnished property, combined with the flexibility of a short term tenancy agreement.
These tenant demands are ensuring that properties to rent are as in demand as ever, meaning furnished short lets continue to be able to command a premium rental price. And in addition to the more stable income stream offered by short lets compared to furnished holiday lets, the overheads are lower without the frequent turnover and associated costs typical of short term holiday lets.
Furnished Comfort with No Need for Major Changes
Opting for furnished residential short lets means property owners can retain all of the furniture in their holiday let property, sparing them the hassle and expense of removing and storing furniture. Additionally the ability to offer a ready-to-live-in space adds considerable value, making the property more attractive to potential renters looking for cottages to rent in the Cotswolds that are both convenient and have a homely atmosphere.
Exploring Furnished Long Lets as an Alternative
Another alternative to furnished holiday lets is to rent out your property in the Cotswolds via a long term tenancy – either furnished or unfurnished. Furnished long lets appeal to tenants that desire the immediacy of a fully equipped home without the commitment of purchasing furniture.
For some long lets, however, there will be the requirement to remove some, if not all of the furniture. In these cases, photography and viewings benefit from having the furniture in place, whilst prospective tenants know they will be able to personalise the space making their cottage to rent in the Cotswolds truly feel like a home.
Long-Term Stability and Reduced Overheads
For property owners, the attraction of transitioning to long lets gives the comfort of extended rental agreements, and a more consistent income over longer periods. This stability can be particularly attractive in times of economic uncertainty.
Additionally, the reduced need for frequent cleaning and maintenance services associated with short-term stays can lower operational costs, further enhancing the property’s profitability.
Navigating the Transition
As the furnished holiday let sector braces for the upcoming tax changes, exploring alternative rental models such as furnished short lets and residential long lets is a sensible move. The key for holiday let owners lies in considering all of the options and being ready to adapt to the changing market conditions proactively.
Whilst the Spring budget may have unsettled some holiday let owners, there are alternative rental options that can offer sustained and potentially increased rental income.
If you would like to discuss your options to rent out your property in the Cotswolds and discover how well suited your holiday let property may be to the long or short term residential lettings market, get in touch with a member of our team today!
