Hopes Labour housing plans will end holiday let ‘blame culture’

UK: Following the results of last week’s UK General Election, new Chancellor Rachel Reeves’ announcement of new measures to accelerate housebuilding in the UK has been welcomed by the holiday let sector, which has been calling for some time for governments to tackle the real factors affecting the housing market.

Andy Fenner, CEO of the UK Short Term Accommodation Association [STAA], said: “It’s reassuring that Labour recognises the only way out of the housing crisis is to accelerate housebuilding, not lay the blame at the door of the holiday let sector. Holiday lets represent a small proportion of total housing and are even outnumbered by long-term vacant homes in more than half of the UK’s local authorities.

“In 2023, we found that there were nearly two million homes identified by planning authorities as ‘deliverable’ that simply hadn’t been built. Only 189,260 dwellings were completed across the UK last year – nowhere near enough to meet demand.

“Britain needs bold, decisive action to cut through the red tape that has held back development and growth for decades. So, while the new Chancellor is absolutely right to decry the planning system as ‘antiquated’, Labour’s reforms must swiftly move from rhetoric to reality.

“The holiday let sector is frequently scapegoated as a cause of Britain’s housing crisis. In reality, holiday lets play a critical role in supporting the UK’s tourism industry, bringing money into local businesses, creating tens of thousands of much needed jobs and supporting local communities often in areas with no other industry.

“Labour has a real opportunity not only to address the root cause of the housing crisis but also to end the blame-game culture that has unfairly targeted holiday lets for too long,” he added.

Fenner’s comments follow the publication of a study carried out by the STAA and holiday home data provider Key Data, which showed that 58 per cent of 313 UK local authority areas have more homes sitting vacant long term than holiday lets.

According to the STAA, the blame game shows a “misunderstanding” of holiday lets’ value to local communities, their offering of authentic local experiences and their responsibility for attracting significant amounts of spending to local businesses. Meanwhile, vacant homes sometimes sit empty for years, not to the benefit of communities, much like unlet second homes, which sit empty most of the year.

Meanwhile, an Oxford Economics report found that in 2021, the short-term let sector brought in £27.7 billion to GDP [gross domestic profit], and supported almost half a million jobs. Despite this, new measures mean that holiday lets can be subject to similar tax premiums as long-term vacant homes.

There are currently 330,325 long-term empty homes in England, Scotland and Wales according to the latest official figures.

Elsewhere, there is optimism that Labour can bring much-needed planning reform to the housebuilding sector, with Kris Collett, managing director of Windsor-based property developers Castlemere Developments, saying: “Big change is now on the horizon with this landslide Labour victory. The housebuilding industry has struggled under 14 years of Conservative Government  and we are optimistic about the change a new government will provide.

“With a large parliamentary majority, Labour is in a position to bring forward much needed planning reforms required to get bolster the housing sector and get the country moving. I believed the whole industry is now a little more optimistic about the future,” added Collett.

However, Amit Sharma, real estate partner at Excello Law, urged the new government not to rush reform and to ensure that the need for new housing is balanced with the need for infrastructure.

He said: “In my opinion planning has become too political in the way that certain things are done at the local level and there has to be clear balance between competing interests in residential development. While there is plenty of space in the United Kingdom the question has to be is there plenty of room for infrastructure to cope for further development and it is these considerations that need to be properly balanced.

“Planning has to be now brought into the 21st century in terms of ease and speed to meet the demands society is placing on the various uses and developments in the country,” he added.

Discussing the Labour Government’s priorities for the domestic holiday let sector, Alistair Handyside MBE, executive chair of The Professional Association of Self-Caterers UK [PASC UK], said: “For me, the most important thing for the short-term rental sector is to get statutory registration done. The legislation is laid down, the software is partly written, and it offers Labour a really quick win.

“As the sector will pay to register, it does not come at a cost for government, and will finally produce the real data, get rid of the bad actors and help de-toxify the sector,” he added.

In the months prior to July’s General Election, previous Chancellor Jeremy Hunt [of the Conservative Party] announced that the government would scrap tax relief for holiday lets to improve the availability of long-term rentals as part of his Spring Budget 2024. By abolishing the furnished holiday lettings [FHL] tax regime, he admitted to his “concern” that the regime had been creating a “distortion”, meaning that there would not be enough properties for long-term rental by local people in their communities.

Hunt argued that the measure to scrap tax relief on furnished holiday lets would not only help to address the acute housing shortage being experienced in coastal areas and holiday hotspots across the UK, but it could also bring in an additional £300 million a year for the Treasury.

A petition and survey launched to address the FHL tax regime and assess its impact on businesses across the UK were put on pause in the weeks leading up to the Election.