Some nine out of 10 adults in the UK could be losing out on tax breaks because they don’t want the ‘hassle’ of owning a holiday let, a study from Hodge shows.
The research found that of the 52% who said they were not willing to invest in one, the biggest thing holding them back was the perceived ‘hassle’ of taking one on.
Only a third of those questioned by Hodge said they would consider investing in a holiday let property, with the vast majority of people admitting to not even knowing there were tax breaks involved otherwise.
Meanwhile, eight out of 10 people (84%) said they weren’t aware of the financial benefits of owning one, and a further 8% said they weren’t sure.
The top five reasons listed out by those not willing to consider a holiday let apart from the hassle involved were:
1. They don’t think their finances would allow it (48%)
2. They don’t want to go to the same place every time (41%)
3. They feel too old to do it now (35%)
4. They’d worry about visitors breaking things (24%)
5. They’d worry about their finances if empty for too long (21.53%)
Emma Graham, business development director of Hodge, says: “These figures are quite concerning in many ways, at a time when people are seeking alternative ways to make the most of any capital they have.”
“To think so many people in the UK are missing out on tax breaks because they don’t know about them means thousands could be missing out on financial gains at a time when many have arguably never needed them more.”
She adds: “This just shows the benefits of people using expert mortgage brokers or financial advisers, as they will be able to explain the tax benefits of owning a holiday let, as well as helping customers navigate the different products on the market.”
Current guidelines state owners of a holiday let or portfolio of property lets can deduct the cost of a mortgage from any profits before calculating income tax, alongside expenses including council tax, utilities, maintenance, cleaning costs, property management costs and advertising too.
However, a property must be classified by HM Revenue & Customs (HMRC) as a furnished holiday let to qualify for the tax relief.
Graham continues: “Most people might also be surprised to find that a lot of Holiday Let and 50+ mortgage products are available to them well into later life.”
“And what’s really frustrating about these findings is that such an overwhelming majority of those we asked weren’t even aware that there are tax breaks involved which could, in effect, create gains difficult to achieve elsewhere in the market.”
“If they look at the kind of mortgage products which are actually on offer, I think most people would be interested to find many of the perceived fears they have in owning a holiday let are often capable of being met before the property search even begins.”
“It’s hard to think thousands could be missing out on making the most of their dream holiday home simply because they think they’re not eligible for, or aware of, the many rewards involved.”