Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.
Holiday lets hold firm despite tax shake-up
Nearly half of holiday let owners say their profitability has increased since the furnished holiday lettings (FHL) tax breaks were abolished in April 2025, according to research from Cumberland Building Society. The lender's inaugural Holiday Let Index found that 48% of owners reported higher profits following the tax changes, while 19% said profitability had remained broadly unchanged.
Owners appear to have responded to the end of the FHL regime with deliberate changes to how their properties are run.
Owners adjust pricing and occupancy strategies
Owners have adapted by changing their approach to revenue management. According to the research, 47% of owners have increased their nightly rental rates, while 46% have focused on boosting occupancy. Rate and occupancy appear to be at the heart of how owners have protected and improved returns since the tax changes took effect.
The research also points to changing guest behaviour in the market. Half of owners reported an increase in last-minute bookings, while 39% have seen shorter stays. The same proportion, 39%, said guests had become more price-sensitive, which underlines the importance of active pricing strategies for owners and the letting professionals who manage properties on their behalf.
Yields remain solid for most owners
Cumberland found that the majority of holiday let owners are achieving healthy returns. Some 86% of owners reported gross rental yields of at least 5%. Within that group, 44% reported yields of 5–6%, and 34% reported yields of 7–8%.
The positive sentiment extends to the future. Some 61% of owners said they were positive about future yields. Expansion plans also remain on the agenda for a significant minority: 30% of owners said they planned to buy another holiday let property within the next 12 months, and 25% intended to expand their portfolio.
What this means for letting professionals
Grant Seaton, head of intermediary lending at Cumberland Building Society, said resilience in the holiday let market is not passive and that owners are having to work for their returns. He noted that owners are looking much more closely at pricing, occupancy, finance costs and how each property is run, rather than assuming demand alone will produce a good result. Seaton added that the owners who perform well over the longer term are likely to be those who understand the numbers behind their property and are prepared to adjust when conditions change.
For UK letting agents and inventory clerks, holiday let owners are managing their properties more actively, with pricing discipline, occupancy management and accurate property records all playing a greater role in performance.
The research was compiled by Pegasus Insight through a quantitative online survey of 125 respondents, comprising 25 mortgage brokers and 100 property owners.
Source: Mortgage Strategy