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UK: Following the UK government‘s proposal to allow regional mayors to levy charges on overnight stays, the industry warns how the move will impact margin and local tourism.
While the proposal aligns England with destinations such as Paris and Milan, many in the short-term rental sector say the timing could not be more challenging.
A 12-week consultation opened this week to explore how the levy should work, who will collect it and whether a cap should be introduced. Although the government argues the fee will help fund local transport, culture and visitor-economy improvements, some operators fear the impact on demand, pricing and investment could be more significant than policymakers realise.
Richard Bond, founder of holiday-let management company Finest Retreats, said yesterday’s Budget and accompanying announcement had created a mixed reaction among owners.
“Everyone has been on hold for three months with investment decisions,” he told STRz. “Owners have been postponing renovations, and potential new owners have been waiting to see what changes were coming. Hopefully the market will unfreeze now, but the tourist tax brings a whole new uncertainty that could last a year and a half while consultations take place.”
Bond said uncertainty alone is enough to make some owners step back from the market. “Businesses hate uncertainty. If you’re thinking of buying a property in one of these areas, you’ll probably postpone that decision. And if you’re already a holiday-let owner, are you really going to invest if you expect demand to fall in two or three years because a levy pushes people away?”
One of the sector’s biggest concerns is the inconsistency that could emerge if some mayors introduce the levy while others choose not to. Bond worries this could distort demand across regional borders. “If you happen to be in an area that imposes a big tax, you’ll be badly affected, while the neighbouring county might not charge anything and will benefit,” he said.
Another major concern is price sensitivity. Unlike hotels, where a levy might feel like a small administrative addition, holiday-let bookings can swing dramatically on a tiny change in nightly rates. “I don’t think policymakers realise how price competitive the market is,” Bond said. “We see huge changes in whether a property gets booked from just a one or two per cent difference in price. A five per cent increase might seem small to a policymaker, but it has a major impact on demand.”
This matters because many owners are already under pressure. Rising running costs, inflation and the removal of the furnished holiday lettings (FHL) regime from April 2025 have all tightened margins.
“Just because Milan or Paris have a tax doesn’t mean we can add one without consequences,” he said. “You’re making yourself more expensive than before, and that shift from the equilibrium will definitely push some demand,” adds Bond.
England’s visitor-levy consultation runs until 18 February, but for many operators, the real question is not whether a levy will be introduced, but how deeply it could impact demand across the UK’s holiday-let market in the years ahead.
