Despite the abolition of Furnished Holiday Let (FHL) tax advantages, nearly half of holiday let landlords have seen their profits increase, a new report from Cumberland Building Society reveals. The lender's Holiday Let Index found that 48% of landlords reported higher profitability, with an additional 19% stating profits remained broadly unchanged.
To achieve these returns, 47% of landlords have raised their nightly rates. Additionally, 46% have focused on increasing occupancy since the tax changes came into effect.
Grant Seaton, Cumberland's head of intermediary lending, noted that the resilience in the holiday let market is not passive, with owners actively managing pricing, occupancy, and finance costs. He stated that a strong gross yield does not automatically equate to a strong business.
The report also indicated shifts in guest behaviour, with half of landlords observing more last-minute bookings. Shorter stays are becoming more common for 39% of respondents, who also noted greater price sensitivity among guests. On returns, 86% of owners reported achieving gross rent yields of at least 5%, with 44% falling into the 5% to 6% yield band.
Looking ahead, 61% of owners expressed positivity about future yields. Furthermore, 30% intend to purchase another holiday let within the next 12 months, and 25% plan to expand their existing portfolios.