Furnished holiday let (FHL)

A furnished holiday let (FHL) is a property let on a short-term, holiday basis to guests who do not use it as their main home. It differs from a standard buy-to-let in how it is managed, how occupancy works, and, until April 2025, how it was treated for tax. The term "holiday let" is used broadly to describe any short-term letting of this kind; "furnished holiday let" or FHL was the specific HMRC designation that unlocked certain tax reliefs, which were abolished from 6 April 2025.

What is a holiday let?

A holiday let is a residential property made available for short-term stays, typically anything from a single night to a few weeks, through platforms such as Airbnb, Booking.com, or direct bookings. The property is usually fully furnished and equipped for self-catering use. Guests book for a defined period and have no statutory security of tenure; when their booking ends, they are expected to leave without the landlord needing to serve notice or obtain a possession order.

Holiday lets are not assured shorthold tenancies because the occupier does not use the property as their only or main home. The arrangement is typically a holiday licence or short holiday tenancy with clear start and end dates. The Renters' Rights Act possession grounds and deposit protection rules that apply to standard residential lets do not apply. However, if bookings become effectively long-term occupation or a guest uses the property as their main residence, a court could decide that an assured tenancy has arisen, bringing full housing law protections into play. Landlords should keep clear written terms, avoid informal rolling occupation, and take advice before allowing extended stays.

Holiday let as an investment

Holiday let investment appeals to landlords who want higher gross income than a standard long-term tenancy can produce, combined with the ability to use the property personally. In popular tourist locations, nightly or weekly rates can produce annual rental income well above what a standard buy-to-let would generate on the same property. The trade-off is that income is seasonal and variable, occupancy requires active marketing, and running costs are higher than for a long-term let.

Key factors when assessing a holiday let as an investment include: location and year-round demand, platform fees (typically 15–20% on Airbnb or Booking.com), cleaning and changeover costs between guests, furnishing and maintenance to a higher standard than a standard rental, and the cost of managing bookings either directly or through a specialist holiday let management agent. Use the August calculators to model occupancy, costs, and projected returns before committing.

Setting up a holiday let

Setting up a holiday let involves several steps beyond a standard tenancy. The property needs to be fully furnished and equipped, including kitchen equipment, linen, towels, and sufficient items for the maximum number of guests. You will need landlord insurance designed for short-term letting rather than a standard buy-to-let policy, as standard policies typically exclude holiday letting. A gas safety certificate and EICR are required, as they are for any let property. A fire risk assessment is also strongly advisable.

You should also check whether your mortgage permits short-term letting, many standard buy-to-let mortgages do not, and you may need a specialist holiday let mortgage. Planning permission may be required in some local authority areas, particularly in London where short-term letting is restricted to 90 nights per year without consent. Some areas have introduced or are considering licensing schemes for short-term lets.

How to run and manage a holiday let

Running a holiday let successfully requires more active management than a long-term tenancy. Bookings need to be coordinated across platforms to avoid double-booking, pricing needs to be adjusted seasonally to maximise occupancy and revenue, and the property needs to be cleaned and checked between every stay. Many holiday let owners use a property management agent to handle this, typically for a fee of 20–30% of rental income. Others self-manage using channel management software to synchronise calendars across platforms.

If you have been tracking income and costs in a holiday let spreadsheet, August's expense tracking and document management features provide a more structured alternative, particularly useful as Making Tax Digital requirements extend to property income.

The FHL tax regime and its abolition

Until 5 April 2025, properties meeting HMRC's furnished holiday let criteria, minimum 210 days available, 105 days actually let, maximum 31-day individual stays, qualified for a more favourable tax treatment than standard buy-to-let. This included full mortgage interest deductibility (not subject to Section 24), capital allowances on furnishings, and access to business asset disposal relief on sale. From 6 April 2025, the FHL regime was abolished. Holiday let income is now taxed in the same way as other rental income, subject to the same Section 24 mortgage interest restriction and without access to the previous reliefs. Landlords with holiday let properties should review their tax position with a qualified adviser.

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