It’s silly season, and the our PM (ever the PR man) is boasting of his family’s decision to holiday at home. Also known as a ‘staycation’, the fact that Mrs Cameron is about to drop a sprog and therefore can’t fly has nothing to do with the Cameron’s decision to spend two weeks in Cornwall.
As well as swimming on the beach with locals, Dave made a speech extolling the virtues of UK holidays. Having just come back from a short break with the step-kids in north Wales, I agree with him. The weather may be changeable, but good old British seaside fun is hard to beat. However, if you ask an investor trying to let a UK holiday property, their view is currently “all at sea”.
The last Labour government threatened to end valuable tax breaks on the letting of furnished holiday property (unlike conventional buy-to-lets, holiday properties are treated as businesses, so losses can be offset, and there are capital gains benefits).
Osbourne’s emergency budget reinstated the tax relief. But now a Treasury consultation document has proposed yet more changes.
Loss relief will be restricted, but the real cloud on the horizon is the number of days that the property must be available and let in order to qualify for tax breaks. The minimum number of days a property must be available to let will rise from 140 days a year to 210. Worse, the number of days it is actually let out to paying guests must rise from 70 days a year to 105 to qualify.
My colleague Tanya Powley at FT Money points out that locations outside of the warm climes of the south east may not be capable of being let for 105 days. But if landlords and landladies fail, they will lose their tax break. So, the 65,000 owners of furnished holiday lets may be set to dwindle, restricting choice for those of us following Dave’s lead by holidaying at home.
Like our PM, I find it hard not to think of work when I am on holiday.
So I was amused to visit the Smallest House in Great Britain when I was in Conwy last week.
Last home to a 6’3” fisherman in 1900, the tiny cottage has running water, an upstairs bedroom (via a ladder), and a fireplace (the seat doubles as the coal bunker).
At less than 70 square feet, its owner, the local historian and writer Margaret Williams charges £1 entry, and there are queues of families who come for a viewing.
It struck me that for its size, it must have the highest rental yield in the whole world!