How to start a holiday let business
Whilst owning a holiday cottage can be a financially rewarding and exciting venture, it can be incredibly daunting knowing...
All self-catering holiday homes are subject to specific holiday let rules and regulations. As an owner, it’s imperative to know and understand the legal requirements for letting your holiday property.
As a Furnished Holiday Let owner, there are rules and regulations affecting holiday rental properties that must be adhered to. These rules and regulations are established and in place not only to protect your guests, but you, your holiday let business and property. While at first, they may seem challenging and complicated, once you understand and put them into effect, making a success of your holiday let can be straightforward and rewarding.
Here is our guide to holiday let rules and regulations, with details on the legal requirements for letting a holiday property.
Looking for something specific? Use our quick links below or read on for our comprehensive guide on holiday let rules and regulations.
The best place to start is understanding the difference between a long-term rental and a short-term holiday let. While the legislation between the two is similar, there are a few key differences.
A long-term let is classed as a property rented out for a minimum of six to twelve months at a time. A property let for this period is controlled by various specific regulations and is considered relatively low risk in comparison to short-term holiday lets.
A short-term holiday let is a property that is let out to holidaymakers for brief time periods. The property is furnished and is rented out from a few nights up to a number of weeks. Holiday let owners are expected to provide fully furnished, well-equipped, overnight accommodation and adequate services in a property.
It is this distinction which dictates the difference in legal requirements between the two types of letting.
Running a holiday let business is no simple endeavour but it is crucial to know your legal obligations. These rules and regulations can’t be overlooked and while they may seem daunting, they are relatively easy to adhere to.
Below, we’ve highlighted certain areas of holiday let rules and regulations and provided guidance and links to useful resources for owners who are researching legislation for UK holiday homes. This it is not an exhaustive list and it’s important to understand that legal requirements are frequently updated. It’s important to keep abreast of any changes and consult the relevant experts if in doubt about a particular area.
Letting your existing holiday property does not require planning permission since there is no change of use. But it’s worthwhile checking that there are no clauses regarding commercial letting in your lease or conveyancing agreement.
If you are thinking of letting your holiday home for the first time or converting part of the property to cater for short-term letting, you will need to contact the planning department of your local authority for advice on planning permission.
Read more about holiday let planning permission for in-depth guidance on the subject.
Holiday let insurance is a specialist form of cover that is required for holiday let properties. It is often a requirement of mortgage lenders that you have specific covers in place to finance your property. Read on to find out more.
Having insurance is meant to protect you and your holiday let, so it is vital to know what it should cover and that you have the right policy in place. It’s important to note that your holiday cottage must have adequate building and contents insurance. This is to cover against damage, accidents, and loss of earnings.
Public liability insurance for a holiday letting business is essential. Without it, you could potentially be exposing yourself legally and financially if your guests are injured.
Having public liability cover for £2 million is essential. It enables you to safeguard yourself from legal hassles and compensation claims in the event someone slips, trips, or has an accident.
If you employ any individual in your holiday home, it is a legal requirement to have employers’ liability insurance. It covers you if an employee has an accident and claims for injuries. The minimum legal requirement for employers’ liability insurance is £5 million, but a lot of insurers provide cover of £10 million as standard.
It’s recommended that you take out a policy that is designed specifically for your property. A holiday let insurance safeguards you from many areas that a normal home insurance policy wouldn’t.
Owning a holiday cottage where the intention is to use it for yourself, family and friends. But also let it out to guests/tourists for a profit during the remaining weeks of the year means that you will require a holiday let mortgage.
It is worth mentioning most residential mortgage lenders don’t permit short-term lettings. If you have a mortgage on the property, you will require permission from your mortgage lender to commercially let your holiday home to guests. The reason for this is, permission may not always be granted or may come at a higher rate of interest.
Read our blog on holiday let mortgages for further detailed information.
Rates and taxes on a holiday let differ from a residential property. If your holiday home is available to rent for 20 weeks (140 days) and physically let for at least 70 days in the last 12 months, then you should be registered for business rates property tax rather than council tax.
Visit the HMRC HS252 help guide for more information or read our blog on holiday let business rates and council tax.
If you qualify as a Furnished Holiday Let, you may be able to claim Small Business Rate relief. This will reduce the amount of council tax you will have to pay. For your property to fit into this category, it will need to fit certain occupancy and availability criteria. Read our Furnished Holiday Let tax guide or visit the HMRC HS252 help guide for more information.
On 6th March 2024, the Spring Budget included an announcement that the Furnished Holiday Let tax regime would be removed from 1st April 2025. There will likely be a period of transition from that date. Technical guidance is due to be released shortly, which we’ll scrutinise alongside the legislation changes, and will update our blogs subsequently. As of April 2024, the tax regime mentioned here is still in existence.
As with any business, it is compulsory to keep accurate documentation and accounts which record income and expenditure for tax purposes. You must declare all earnings from your holiday let business when filing your annual return to HMRC.
Understanding the tax rules and allowances is important to ensure your finances are all correct and that you are legally compliant with the government tax system. Using the services of a professional accountant or bookkeeper to manage your finances ensures that you are paying the correct tax as well as making the most of the allowances that the government provides.
Read our Furnished Holiday Let Tax guide or visit the HMRC HS253 guide for further advice.
As a conscientious owner, you will want to make certain that your guests enjoy a safe environment. Effective management of general holiday let health and safety is important not only for the security and well-being of you and your guests, but also to reduce your liability in the event of an accident.
For more details on the main health and safety requirements when letting out your holiday home read our ‘Owner Property Safety Guidance’.
You want your guests to enjoy their time in your holiday let property, and for them to feel safe and comfortable. Doing a general risk assessment around the property will highlight any potential issues, both inside and outside your holiday home. Use common sense to identify potential areas of risk. These could include:
The Health and Safety Executive (HSE) is a UK government agency. They are responsible for the encouragement, regulation and enforcement of health, safety and welfare in order to safeguard individuals from potential risks. There is plenty of information available on their website to help you comply with practical health and safety responsibilities.
Read the HSE guidance on simple health and safety for practical resources and further information.
Fire safety matters. Taking care to understand the risk that fire represents in your property enables you to consider and implement the right fire safety arrangements. This will protect the lives of your family, guests, your property and your holiday let business.
Practical management of fire safety with good processes and control measures is essential to ensure fire prevention. If a fire does occur it can be controlled or contained effectively allowing people to escape to safety. Most fires are preventable and as long as you can demonstrate that your fire safety management steps meet the HSE fire safety recommendations, they are likely to be acceptable.
A fire risk assessment should be the foundation for all fire prevention at your holiday property. A fire risk assessment is an organised review of your holiday cottage, the activities carried out, and the prospect that a fire could start causing harm to those in and around the premises.
Conducting and implementing a thorough fire risk assessment can save lives. Not only is it a legal requirement of all holiday home owners, it ensures that you provide a duty of care to keep your guests safe.
You should also consider installing other fire safety measures such as emergency lighting, fire extinguishers and a fire blanket, all of which require regular checks and testing.
If you have an open fire or log burner, it is best practice and often a requirement of insurance to have the chimney swept once a year. Be sure to leave clear instructions for your guests on how to safely use the fire.
When holiday letting with Coast & Country Cottages, as part of our agency managed service we will organise a fire risk assessment on your behalf.
Visit the HMRC website for guidance about completing a fire risk assessment.
Download your fire safety assessment template from VisitEngland here.
All premises used as self-catering holiday lets require an interlinked automatic detection and fire warning system. These must be tested regularly and must be loud enough to wake anyone sleeping in the property.
While self-catering holiday lets are considered a low risk, you still need to make sure your furniture and furnishings comply with commercial fire safety standards.
The law requires you to prove that any of the furniture and fittings supplied in the property comply with the standards set out in the Furniture and Furnishings (Fire) (Safety) Regulations 1988.
These regulations are in place to make sure that any upholstered furniture, supplied for domestic use, has a certain level of fire resistance. If you are letting out your holiday cottage, the regulations apply to every upholstered item in the property, and it is required that they are suitably labelled.
If your holiday let contains any gas appliances (either mains gas or LPG gas), it’s your legal obligation to ensure that all appliances are correctly installed, well-maintained by certified Gas Safe engineers, checked on an annual basis and that the correct alarms are fitted in the event anything does go wrong. It is also your responsibility to ensure that appliances, their fittings, flues and chimney are maintained too.
As a holiday let owner, you need to keep up to date on the latest gas safety regulations and the required checks that need to be done on your property.
According to the HSE, you must ensure gas appliances are checked annually and that a CP12 certificate (landlord’s gas safety certificate) is provided for the property, covering all relevant appliances.
CP12 checks should only be conducted by a registered Gas Safe engineer who must provide a copy to you. Along with one copy retained for your heating company and one displayed in the property for your guests to see.
The Gas Safety (Installation and Use) Regulations 1998 outlines the legal duties of self-catering accommodation providers in relation to gas appliances.
Where a property has a gas appliance, the HSE strongly recommends the use of carbon monoxide (CO) alarms as a useful precaution. This gives guests advanced warning of carbon monoxide in the property. Make sure to check the devices regularly and provide your guests with instructions on how to operate all gas appliances safely.
As a holiday let owner, you are required by law to ensure that all electrical appliances, circuits and fixed installations within your property are safe. All electrical supplies and wiring should be checked for safety and any electrical appliances (washing machine, TV’s, toasters) must be safe to use.
Faulty electrics can result in serious injury, death or fire. If you fail to maintain electrical installations and appliances you could be accountable.
While there is no legal requirement to obtain and renew an electrical safety certificate, it is worthwhile showing that you are complying with electrical safety requirements. Take a proactive approach and have a qualified electrician ensure the electrical items are safe by PAT (portable appliance testing) them.
Read our guide on everything you need to know about electrical safety regulations for holiday lets.
Holiday home luxuries like hot tubs and swimming pools are often a big attraction for holidaymakers and can make a property more appealing. However, if you opt to include these added extras, it is important to make sure that they are well maintained and safe to use.
Sensible health and safety around swimming pools is about managing risk. Use common sense in trying to prevent accidents. Close off the pool area with fencing, put up safety signs and inform your guests of ‘pool rules’ for their own well-being.
Here is some useful guidance from the HSE on managing health and safety in swimming pools.
If you have a device available in any short-stay accommodation to overnight visitors, where they are able to watch or stream live TV, you will need a TV licence. This applies to any device including a TV, desktop computer, laptop, mobile phone, tablet, games console, digital box or DVD/VHS recorder.
You will need to be covered if:
For holiday lets, you’ll need a special type called a Hotel and Mobile Units Television Licence (hotel licence).
Currently, a single TV licence costing £159 will cover up to 15 accommodation units on a single site. So, if you have holiday cottages in different locations, you’ll need a separate licence for each location. The TV Licensing website tells you more.
You don’t need a TV License if guests are watching:
You will also need a DVD Concierge license if you provide a DVD film library for your guests. Providing films to paying guests without a licence is an infringement of copyright law (the Copyright, Designs and Patents Act 1988).
The main organisations which issue licences to businesses are Filmbank Media and MPLC. Prices will depend on the size of your accommodation and the length of the licence. If you don’t provide DVDs and guests bring their own, you won’t need a licence.
Depending on the size and type of your holiday let, you may also need a copyright licence to play music on a device.
The Copyright, Designs and Patents Act 1988 states “any use of copyrighted music in public is possible only with the permission of the person who holds the copyright to the music being played”.
This means that you may need something called TheMusicLicence in order to avoid this. You can contact the PPL PRS for advice on your music usage requirements.
The good news is you probably won’t need a licence for music if you only own one holiday let with three bedrooms or less. According to Visit Britain you will be exempt if:
You have a self-catering accommodation with three guest bedrooms or less and:
Making sure you understand the relevant holiday let rules and regulations may not seem exciting, but it is important. The legislation surrounding holiday lets is there to protect you, your property and your guests. It is essential that you don’t overlook your duty of care to your guests and that you comply with the law.
There are various sources of information that you can use to keep up to date on topics. Referring to the HMRC guidance for renting out a property and the HMRC guidance for private renting will detail the governmental guidance on what you need to comply with and should always be your first point of reference.
Additional advice is available from the national tourism board VisitEngland who have published The Pink Book. A guide for guest accommodation providers that gives an overview of your legal obligations.
At Coast & Country Cottages, we offer our South Devon holiday home owners bespoke levels of property management service. To find out more about the levels of service we offer, order a copy of our Owners Guide or read our blog holiday home management options.
If you would like to find out more about letting your holiday home, call our experienced team on 01548 843773 (option 2) or visit our Let Your Cottage page to request a free Owners Guide today.
Request your FREE Owners Guide
If you’re looking to start a holiday letting business, the following owner guides may be useful to you:
Please Note: The information contained in this article was accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time, so please contact our prospective new owner team if you’d like to hear how. Nothing in this article constitutes the giving of financial, tax or legal advice to you; please consult your own professional advisor (accountant, lawyer etc). in this regard. If we have referred within the article to a third-party provider of unregulated holiday let mortgages, this is due to the fact that such mortgages aren’t currently regulated by the FCA.
As a helpful reminder, your home may be repossessed if you do not keep up repayments on a mortgage, so again anything you decide to do in this particular area this is one on which you should take your own professional advice on too, as we aren’t providing and can’t provide you with this.
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