New Holiday Let Index shows landlords remain confident

The end of the Furnished Holiday Lets tax regime has dented profits for property investors but many are adapting.

The findings were revealed in a new Holiday Let Index from the Cumberland Building Society.

Produced in partnership with Pegasus Insight, the Holiday Let Index explores the trends, challenges and opportunities shaping the sector.

The report explores market confidence, investor behaviour, lending activity and the impact of recent tax and regulatory changes, providing a snapshot of how the holiday let market is evolving.

The research found that while 27% of property investors have seen profits reduced in their holiday lets portfolio by up to 15% amid the tax changes, almost half have seen profits increase.

This has been helped by increasing rents, raising occupancy and reducing capital expenditure.

Some landlords have even switched to an interest-only mortgage, reduced portfolio size or switched to a limited company structure.

Demand also seems to remain strong despite the fewer tax perks.

The index found that 88% of brokers have seen enquiries increase, while 32% of investors say higher yields are the main driver of investment.

Grant Seaton, head of intermediary lending at The Cumberland Building Society (pictured above), said: “Given everything the holiday let sector has experienced over the past few years, it would have been easy to surmise that investor confidence had fallen sharply.

“What our research actually revealed was a much more nuanced picture, with several findings that challenged some of the assumptions surrounding the market.

“That’s exactly why we wanted to produce the Holiday Let Index.

“We wanted to hear directly from the people who know the market best.

“By bringing together the views of brokers, landlords and homeowners, we’ve been able to build a clearer picture of what’s happening across the sector today, how recent changes are shaping decisions and where opportunities continue to exist.”