Commons Sense

House of Commons · Westminster Hall

Furnished Holiday Lettings: Taxation

01 May 2024 · 8 other contributors · 3,931 words

Opened by Peter Aldous Con Waveney

Responding minister: Nigel Huddleston

Taxation

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Peter Aldous raised concerns about furnished holiday lettings: taxation in Westminster Hall. A government minister responded.

Key points

  • The MP is concerned that proposed changes to the taxation of furnished holiday lettings could have unintended consequences, particularly in areas where such rentals are vital to local economies.
  • The MP argues there is no statistical evidence linking furnished holiday lets to the housing crisis or house prices, noting that only 0.4% of the UK housing stock falls within the FHL regime.
  • The MP requests a full public consultation on the proposed changes, citing concerns over the lack of prior consultation, and asks the Treasury to consider reversing mortgage interest relief restrictions.

Key requests to Government

The MP asks for a full public consultation on the proposed changes, citing concerns over the lack of consultation prior to the proposal. He requests that the Treasury consider reversing mortgage interest relief restrictions and ensuring no retrospective taxation for entrepreneurs in the FHL sector.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Peter Aldous Con Waveney

The MP is concerned that the proposed changes to the taxation of furnished holiday lettings could have unintended consequences, particularly in areas where such rentals are a vital component of local economies. He highlights that only 0.4% of the UK housing stock falls within the FHL regime and argues there is no statistical evidence linking furnished holiday lets to the housing crisis or house prices. The MP also mentions potential job losses and economic impacts if the proposals are implemented.

Other contributors (8)
  • Alistair Carmichael Lib Dem Orkney and Shetland

    Understood housing shortage concerns but argued building more houses is the solution; advocated for improving the sector through tax provisions to enhance visitor offerings.

  • Angus MacNeil SNP Na h-Eileanan an Iar

    Questioned the Chancellor's claim about housing distortion without evidence; pointed out Norway as a case where second homes do not equate to affordable first homes.

  • Anne Marie Morris Con Beaconsfield

    Suggested the need for an impact assessment to evaluate effects of reforms on economy, housing, tourism, GVA, and jobs. Asked if the Minister was willing to look at a carve-out—an exemption—for properties that cannot be used in the private rented sector because of covenants on them, which was discussed by the Office of Tax Simplification.

  • Christine Jardine Lib Dem Edinburgh West

    Highlighted concerns from representatives of Scotland's furnished holiday lets association about double impact of legislation and licensing rules, called for a joined-up approach.

  • Thérèse Coffey Con Suffolk Coastal

    The MP acknowledges challenges faced by local people looking to rent homes near Southwold and agrees that while some measures might be beneficial in certain areas, they should not apply universally.

  • Duncan Baker Con North Norfolk

    Thanked his hon. Friend for bringing up the issue of housing supply in North Norfolk, noting concerns that new tax changes might lead to more second homes being bought and exacerbate the housing situation.

  • Jim Shannon DUP Strangford

    Congratulated the hon. Member on bringing forward the debate, expressing desire to attract bed nights through Airbnb-type scenarios in Strangford, questioning if removing tax incentives would prevent local economy benefits.

  • Simon Jupp

    Expressed widespread concern about changes from East Devon owners and operators, suggested a public consultation and exemptions based on property location or use.

Government Response

Nigel Huddleston

Stated there are no plans for a consultation but that does not mean that hon. Members cannot engage with him. Acknowledged the broad recognition that the current system is contributing to some distortions, such as an incentive for disproportionately large numbers of properties being used for short-term rentals rather than long-term rentals. Mentioned hearing from hoteliers and owners of B&Bs who complained about the unfairness of the current system and from pub, bar, and restaurant owners who said the number of short-term lets was undermining their value proposition. Emphasised that FHLs play a vital role in the tourism ecosystem but noted the proposed changes would put them on an equal footing with long-term lets to level the playing field. Noted that abolishing the tax regime does not mean eliminating FHLs, and there will still be benefits such as £2,400 taken off income tax for higher rate paying landlords with mortgage interest costs of £12,000 per year after abolition.

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