Tax changes and rising legislative pressure are making specialist mortgage advice critical for holiday let owners
Holiday let landlords are facing a mounting tide of tax and legislative pressure, and the Autumn Budget has done little to ease it, according to Joe Stallard (pictured top), managing director at House and Holiday Home Mortgages,
The Budget, delivered by chancellor John Healey, confirmed that from 2028 mayors and certain local authorities will gain the power to introduce overnight visitor levies.
The announcement came on top of an already difficult period for holiday let owners. The government withdrew the furnished holiday lettings (FHL) tax regime in April 2025 – a scheme that had allowed landlords to claim tax relief on properties let to holidaymakers for at least 105 days a year, and which generated £2.43 billion in property income for around 130,000 unincorporated landlords in 2023–24, according to HMRC's property rental income statistics. Stallard says the cumulative effect is hard to ignore.
"It's the second hit in a couple of years," he told Mortgage Introducer. "Holiday lets have lost their special tax treatment within the furnished holiday lettings regime that ended in April 2025. It is tough for these owners who are trying to provide good quality accommodation for people to then have another tax hit."
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Why expert advice matters more than ever
Brokers operating in this space are becoming more valuable, not less, and Stallard believes the squeeze on margins is the reason why. When every pound counts, the difference a broker can make on a mortgage rate compounds quickly.
"Getting everyone in that holiday let ecosystem around you being a real expert becomes really important," he said. "Whether that's your property tax adviser, whether that's your mortgage broker, whether it's the people doing the management or the marketing of the property."
He was specific about the numbers. "If we can save somebody £50 a month on a mortgage compared to them going directly somewhere else, over a year that's an extra £600. That's an extra booking that you might have had over a couple of years. This stuff really adds up."
The outlook also depends heavily on what kind of investor is in the market. Those who purchased a holiday property partly for personal use and partly to cover costs occupy a different position to the more commercially minded landlord with a limited company structure and a diversified portfolio. "It depends on the purpose of the investment," Stallard said. "It's a different type of investment to if they're just purely looking at the numbers."
Professional landlords operating at scale may find more room for optimism. "If we look at it compared to at least a few years ago, there's more lenders in the market, there's more choice out there, there's better, more flexible criteria. It's tough, but lenders are trying to respond."
The Renters' Rights Act complicates hybrid models
One emerging casualty of the legislative environment is the hybrid model, where owners let a property as a holiday home during peak season and move to longer-term tenancies in quieter months. The Renters' Rights Act, which removed fixed-term tenancies, has made that kind of flexibility considerably harder to manage.
"You can't now have a fixed-term tenancy," Stallard said. "The tenant can leave by giving notice, but it's much harder for the landlord. That kind of flexibility to create this sort of hybrid model has become a lot harder to do."
The implications for the buy-to-let mortgage market are significant. Landlords who might previously have used a hybrid approach as a hedge against seasonal income volatility now have fewer tools at their disposal, pushing them further towards either full short-term letting or a complete exit from the market.
A market at risk of losing its competition
Stallard is candid about the broader trajectory. The post-Covid boom in domestic UK tourism, which drove a surge of interest in holiday let investment, has faded as travellers return to international destinations. Average gross income for a UK holiday let owner reached £25,600 in 2025, up from £24,700 the previous year, according to Sykes Holiday Cottages' Holiday Letting Outlook Report 2026, but Stallard warns that piling further costs onto owners risks pushing holidaymakers abroad.
"The more we do to raise the cost of holidaying in this country, the more people are going to go abroad," he said. "And that is ultimately them spending money in economies that are not the ones here in the UK."
Stallard acknowledged that tougher conditions will drive some less serious operators from the sector, which he sees as broadly positive, but warned against overcorrection. Policymakers, he argues, need to hear from those with genuine expertise before reaching for blanket measures, and brokers who work with the best mortgage lenders in the UK have a role to play in making that case.
"I would just encourage the people making these changes to get the insight and the expertise that is well placed within holidaying and the holiday let industry within the country, rather than just bringing out blanket policy that's designed to win cheap headlines."
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