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Investment: Holiday home tax reliefs and the 2010 General Election - Ross Elder, HolidayLettings.co.uk

Holiday home tax reliefs take centre stage at the 2010 General Election

We are only half way through the month and the politics surrounding the British tourism sector has been eventful to say the least.

The ink was barely dry on the Government’s changes to the furnished holiday lettings tax rules, when the Conservative party threw a welcome spanner in the works and spoke out on behalf of holiday home owners across the UK. When shadow Chancellor George Osbourne refused to endorse the repeal of tax reliefs for holiday home owners, he forced the Government to retract the changes until the outcome of the election. I for one am thrilled by this unexpected turn of events and eagerly anticipate the election result in May.

While the matter lies in temporary limbo, it is clear that providing tax reliefs for British owners of holiday homes in the UK and EEA needs to be fiscally neutral. It is imperative that the Government, whichever party that may be come mid May, acknowledges that there is a proportion of people who earn their living from holiday lettings and who would be significantly financially affected if these rules were to be withdrawn. Retracting tax reliefs such as capital-gains rollover reliefs, the option to contribute income from holiday lettings to a pension plan and the opportunity to offset any loss made on the running of a holiday let against other personal income, sends the message to these owners that in the eyes of society their livelihood is not viewed as a real job, more a property investment unworthy of the benefits given to those that do work for a living.

As someone who owns two holiday homes I can say that running a holiday let is not an entirely easy task, it can be time consuming and tiring when handled all year around - a fitting description of a full time job if ever there was one. Without sufficient financial incentives the self-catering holiday lettings industry could see holiday home owners exit the marketplace. In turn, rental prices could go up and holidaymakers will either be forced to pay higher rates or they will abandon the self-catering sector completely.

I am not just speaking as the founder of a holiday lettings business. Should Labour retain their seat on May 6 Holiday Lettings will continue to campaign against the changes and for a more fiscally neutral solution. I believe that rather than scrapping the reliefs completely a better solution is that put forward by The Tourism Alliance - to change the old eligibility criteria and increase the minimum period the property is let from 10 weeks to 15 or 20 weeks. This will identify better those who earn a living from their property and still let them benefit from the old tax rules. Furthermore, it may encourage those who only let their property for peak periods to extend their offering in order to also benefit. This in turn will increase self-catering capacity and reduce prices for holidaymakers. Having the advantageous offsetting rules in place also incentivises new entrants to the marketplace for whom the first couple of years are the most expensive, (coping with start up costs, etc.).

Encouraging and rewarding the holiday lettings industry, which is so entrepreneurial in nature, will have long term economic benefits both locally and nationally, especially in the arenas of tourism and hospitality. Whatever happens, the 2010 elections are shaping up to be one of the most exciting and hotly debated of recent years for British second home owners. Roll on May 6th.

Ross Elder

A buy-to-let investor and holiday home owner, Ross is passionate about doing holiday home letting effectively and efficiently with oodles of customer care. He is a keynote speaker on successfully marketing and managing holiday home lettings and instils much of his drive into the team at Holiday Lettings. Founded by Ross and his business partner Andy Firth in 1999, the company is now the busiest holiday home website in the UK

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