Holiday Let Mortgage Enquiries Climb Even as UK Tax Perks Vanish

Cumberland Building Society, one of the UK's main specialist lenders for holiday let mortgages, says enquiry volumes from prospective holiday let buyers are rising even though the tax advantages that once set the sector apart from standard buy-to-let have largely disappeared. The lender's own pipeline data, drawn from broker and direct enquiries, points to sustained buyer interest despite a run of unfavorable policy changes over the past two years.

What changed for holiday let owners

The Furnished Holiday Lettings tax regime, which let owners deduct full mortgage interest and claim capital allowances unavailable to ordinary landlords, was abolished from April 6, 2025, following the 2024 Budget announcement. That change alone erased the main financial edge holiday lets had over long-term rentals for tax purposes. Layered on top: Wales requires a holiday let to be actually let for at least 182 days a year to qualify for business rates rather than council tax, a threshold many owners struggle to hit consistently. Scotland has required a short-term let license from the relevant local council since 2022, with enforcement tightening as councils work through backlogs of applications. English councils, meanwhile, now have the power to charge a council tax premium of up to 100% on second homes and holiday lets that sit empty for parts of the year.

Why demand hasn't followed the tax base down

Cumberland's figures suggest buyers are pricing the new costs into their return calculations rather than walking away from the asset class altogether. Brokers report that clients are treating holiday lets more like a long-term property play than a tax-driven side income, factoring in higher borrowing costs and compliance overhead before they commit. Staycation demand in the Lake District, the Cumbrian coast and other rural UK markets has held up well enough post-pandemic that many buyers still see steady occupancy as the more reliable part of the equation, even with a smaller tax cushion underneath it.

What this means for operators weighing a purchase

Anyone underwriting a new holiday let purchase now has to run the numbers without the interest-relief advantage that used to flatter the returns, and factor in whichever licensing or occupancy threshold applies in their nation. In Wales, that means tracking the 182-day letting requirement closely enough to avoid a costly reclassification to council tax. In Scotland, it means securing a license before marketing a property at all. Lenders like Cumberland say the appetite is still there, but it is worth noting that a lender's enquiry count tracks interest, not completions, and plenty of would-be buyers will still fall out once they see the fully loaded cost of ownership under the new rules.