Holiday Letting FAQ's
Will my rental income increase?
The Rental Income should increase considerably during the summer months and there will also be an increase in the rental achieved when the accommodation is occupied with Company Lets during the winter months. The greatest financial benefit of such property investments is usually the Capital Growth of the property during the time it is rented, if it is held as a long-term investment.
Can we or our friends use the property?
Some Holiday Accommodation Agents will restrict personal use, however Bournecoast Holidays allow flexibility in Tenancies and Holiday Lets and will attempt to accommodate any requests you have for using your accommodation yourself or for your family. We do request that you provide us with a minimum of six weeks in the peak season.
Will the property be booked all year round?
The Holiday season can be as long or short as you want it to be. Bournecoast Holidays recommend a Holiday season of approximately 20 weeks to prevent vacancies occurring during the winter months. During the winter months Bournecoast Residential can market your property for Winter Lets, Company Lets, Student Lets or Short Term Lets to clientele such as the following:
- Professionals from AMEX, JP Morgan • Anglo European Chiropractic Students
- Air Traffic Controllers & Trainee Pilots • International Business Professionals
- Theatre Performers • Foreign Language Students
- People in between houses • Bournemouth University Students
Does the property need to be furnished?
The property must be fully furnished and must include everything you would expect in a property when you go on holiday. A recommended Holiday inventory list and list of recommended suppliers in the local area can be provided by Bournecoast Holidays.
Will my property be looked after?
Holiday accommodation is checked on average once a week during the changeovers. Bournecoast Holidays do not accept all single parties without special permission from owners; the majority of visitors are families. Any restrictions can be enforced on request (e.g. no smoking, no children, no pets), however we must point out that properties with less restrictions have a wider market available to them and therefore usually end up with more bookings. A general rule is that if you provide quality accommodation, holiday visitors will treat it with the respect it deserves.
Aren't furnished holiday lets just too much hassle?
You can get as involved as you want to. Bournecoast Holidays are there to take the hassle away from you and offer Landlord Services from Bookings Only to Full Management (specifically designed for people that live out of the area). Our Full Management Services allow a Landlord to enjoy the benefits of an Investment Property without being involved with the day-to-day management.
Furnished Holiday Letting: The Benefits
- Entitlement to machinery and plant capital allowances on furniture, furnishings etc in the let property, as well as on machinery and plant used outside the property (such as vans and tools)
- Losses can be set against your total income and are not restricted to the rental business
- Furnished holiday lettings are treated like trade for loss purposes and get the same loss relief's as trades. If your losses exceed your income you can also choose to set your losses against your capital gains - see your professional adviser or tax office for further details
- Capital gains tax relief's such as business asset roll-over relief and taper relief
Business asset roll-over relief and taper relief
Business asset roll-over relief allows you to defer the gain on the disposal of a business asset when you acquire another business asset. You can claim relief if you are carrying on a business of furnished holiday lettings. If you use the whole amount you receive from the disposal of old assets to acquire new assets, the whole of your gain will be deferred by deducting it from the cost of the new assets.
If you use part of the amount you receive for the disposal of the old assets and that part includes some of the gain you made, you will get relief for the part of the gain you have used. You deduct that part of the gain from the cost of the new assets. "Furnished holiday letting activities benefit from generous tax reliefs - provided that they fall into the tax man's definition" comments Julian Smith, Director of Private Client Services at Princecroft Willis. This covers UK properties that are let furnished on a commercial basis so long as they are available for letting for at least 140 days in a year and actually let for at least 70 days in that period. There are also restrictions on longer term lets.
Where all of these criteria are met, which is an area that Bournecoast Holidays specialise in, the activities are treated as a trade for income tax and capital gains tax purposes. As an example, any capital gain will be taxed at a maximum rate of 10 per cent after 2 years of ownership. You can even postpone the tax if the proceeds are reinvested in qualifying replacement assets including another furnished holiday let.
The special treatment does not extend to inheritance tax but complete relief from this tax may be available where the lettings are short term and the owner is "substantially involved" with the holidaymakers. The owner may use an agent, which the taxman suggests should be a relative or a housekeeper. However, a commercial agent such as Bournecoast may well be able to provide a restricted ongoing service if inheritance tax relief is sought in addition to the other relief's.
Please note that all details printed within these pages are for information purposes only and are not to be taken as Financial or Tax Advice. To obtain Financial Advice or Tax Advice you will need to speak the relevant specialists about your particular circumstances.