‘Staycation levy’ backlash as Budget removes benefits from short-term holiday lets

‘Anyone who wants a break in the UK outside a hotel, this would put up the cost’ ‘It’s very likely we’ll have to put our prices up, by how much I’m not sure’

RISHI SUNAK is facing a backlash on the removal of tax benefits for people who run short-term holiday lets in the Budget, with some Conservative MPS dubbing it a “staycation tax”.

The abolition of the furnished holiday lettings (FHL) regime, which gives perks such as relief for costs incurred kitting out the properties, was announced by Jeremy Hunt, the Chancellor, on Wednesday.

Some on the Tory benches are arguing that the increased costs of running short-term lets will be passed on to holidaymakers in the form of higher prices.

One Tory MP told The Telegraph: “This is an attack on business, putting up a price on the great British holiday, the great British getaway. It is the staycation tax.

“Anyone who wants a break in the UK outside a hotel, this would put up the cost of this holiday. But not if they choose to go to Spain or the Republic of Ireland.”

The Chancellor argued in his Budget speech the move would even out support for both short-term and long-term lets. While Tory MPS in holiday communities with many empty holiday lets have lobbied the Government for a crackdown on the practice, others in the party are critical of such measures.

Meanwhile, Andy Fenner, the chief executive of the Short Term Accommodation Association, said that while it would take some time for prices to rise, increases and even closures were “inevitable”.

He said: “It is inevitable at a time when we have had massive inflation and a cost-of-living crisis that has affected everyone. They [short-term let owners] are small businesses. They don’t have the capacity, as large hotels do, to absorb these constant increases in costs. This is just another thing that is going to hit them.”

Gemma Worley, the owner of four cottages on Lower Trengale Farm in Cornwall, said: “It’s very likely we’ll have to put our prices up, by how much I’m not sure but our running costs are going to be significantly more.”

She said that she would review her pricing once she fully understands the financial impact of the policy.

“I imagine that this will happen across the board with people in my situation,” she said.

Chris Saynor, who runs award-winning holiday lets Bethnal & Bec with his wife, Victoria, said that the changes would stop him claiming about £10,000 in mortgage relief to which his business had been entitled and it might delay a number of planned net zero updates.

He said: “Let’s say it costs us £30,000 to put in a whole raft of solar and a heat pump, which is very conservative. That’s a cost which we could never get back, a cost to the business. But we can’t claim any expenses against it.”

But he said that stays at the holiday lets would not become more expensive, because they had already experienced a drop in bookings as a result of strained household budgets. He said: “While all our costs are going up, our labour costs are going up, our expenses are going up, our energy bills went up, and everybody else put prices up but we couldn’t.”

A spokesman for Airbnb played down the consequences of the changes for its users.

They said: “We do not expect this to have a significant impact on our business. The vast majority of hosts share their own homes for around three nights a month, which is far below the 105 nights of bookings for furnished holiday lets.

“The typical host earns around £5,500 a year by occasionally renting their space, and two in three say the extra income helps them afford the rising cost of living.”