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Turning a property into a holiday let means that you will be able to increase rent and reap the benefits of a more generous taxing following the reduction in tax relief on mortgage interest for landlords.  

 

What do I need to do? 
 
Your property will need to qualify as a holiday let by meeting the letting conditions set out by the government, which include that it must be available to rent for 210 days a year and occupied for at least 105.  
 
Once you know that your property qualifies as a furnished holiday let (FHL) then you need to ensure that you’re not breaching the terms of your current mortgage, as most buy-to-let mortgages require the property to be let under an Assured Shorthold Tenancy (AST).  
 
If you don’t let your lender know or get their permission to change your mortgage, you will be fined, face a higher mortgage rate or, in extreme cases, threatened with repossession.  
 
You may also need to remortgage from a buy-to-let to a holiday let mortgage with a different lender, as there are only a handful of lenders that offer this type of loan.  

 

Changing the use of your property to a holiday let may also invalidate your existing insurance, meaning any claim will be rejected as your policy will be null and void.  

 

What are the tax benefits or implications?  

 
Over the next few years, landlords will see the amount of tax relief that they can claim on their mortgage interest reduce, and will have to pay a 3% surcharge on stamp duty if they buy a new buy-to-let property.  

 

This isn’t the case for holiday lets, as the reduction in tax relief doesn’t apply, meaning full interest relief can be claimed. 
 
The cost of furnishing the property can also be written off for tax purposes against rental profits.  
 
For advice on getting a holiday let mortgage, speak to one of our expert advisers who will be able to help you with the next steps.