Cumberland Holiday Let Index: Nearly three-quarters of holiday let owners influenced by council tax premiums

03 November 2026

Policy and tax changes are playing an important role in decisions made by holiday let owners about their future in the market, according to new research from Cumberland Building Society.

The Cumberland’s inaugural Holiday Let Index suggests that owners are having to respond to a series of changes affecting the costs and regulation of running a holiday let, with council tax premiums among the most influential.

Nearly three-quarters (72%) of owners surveyed said council tax premiums on second homes and holiday lets had a major or moderate influence on their decision to participate in the market. This included 31% who described the influence as major and 41% as moderate.

The findings suggest this is not an isolated concern. The removal of full mortgage-interest relief was cited as having a major or moderate influence by 70% of owners, while 67% said the same about the wider abolition of the Furnished Holiday Let tax regime. Changes to capital allowances influenced 67%, while increased reporting and compliance requirements influenced 62%.

The research also comes against the backdrop of further tax changes announced in the Government’s Autumn Budget. From April 2027, income tax rates on property income will increase by a further two percentage points, taking the basic rate to 24%, the higher rate to 44% and the additional rate to 49% in England, Wales and Northern Ireland.

For holiday let owners whose profits are subject to property income tax, the changes could place further pressure on returns at a time when many are already adjusting to the abolition of the Furnished Holiday Let tax regime. The announcement adds to the financial considerations facing owners as they assess the long-term viability of their properties.

Further changes to the way holiday lets are regulated could also have a significant influence on owners’ decisions.

Among the 92 respondents who answered a question about the possible introduction of a C5 planning class restricting the number of holiday lets in their area, 55% said they would be very or somewhat likely to sell their property.

However, the Index also found that many holiday let businesses retain some capacity to absorb higher borrowing costs.

Asked what would happen if their mortgage interest rate increased by a further one percentage point over the next 12 months, 40% said their profits would reduce but their holiday let would remain viable. A further 27% said they would be close to breaking even.

For some owners, higher rates would require a more significant change. Some 15% said they would need to adjust their approach through pricing or cost reductions, while 7% said they would be likely to convert their property to a long-term rental and 3% would be likely to sell. Just 6% said a one-percentage-point increase would have no impact on their ability to continue operating.

While the research shows that regulation and rising costs are influencing decisions across the sector, it also suggests that most owners are already preparing for the next stage of regulation.

Some 84% said they were prepared for the National Registration Scheme, compared with 16% who said they were not.

The findings show a holiday let market adapting to a changing tax, policy and borrowing environment, with owners having to consider the effect of these changes on the long-term viability of their properties.

For the purposes of the research, holiday let owners comprise private landlords with at least one mortgaged holiday let and homeowners who own their own home alongside at least one mortgaged holiday let.

The Cumberland’s Holiday Let Index was co-ordinated by Pegasus Insight through a quantitative online survey of 125 respondents, comprising 25 mortgage brokers, 50 private landlords and 50 homeowners from across the UK.

Grant Seaton, Head of Intermediary Lending at Cumberland Building Society, said:

“What these findings show is that the decision to invest in a holiday let is being influenced by far more than the property itself. Owners have already had to contend with considerable changes to the tax treatment of holiday lets, and the latest Budget announcement means those whose profits are subject to property income tax could face another increase in their tax bills from April 2027.

“I think it’s important, though, that we don’t lose sight of the contribution holiday let businesses make to local economies. In areas such as Cumbria and the Lake District, tourism is a major source of income, and holiday accommodation plays an important role in attracting visitors who then spend money in local shops, restaurants and other businesses. These are often small, independently run operations, and their contribution to the wider hospitality sector shouldn’t be overlooked.

“Location could therefore become an even greater consideration. Properties with similar purchase prices and rental potential could face different costs or restrictions depending on the local authority they sit within, so understanding the local position is becoming a much bigger part of assessing whether an investment stacks up over the longer term.

“There’s also evidence of resilience within these findings. Four in ten owners believe their holiday let would remain viable even if their mortgage rate increased by another percentage point, albeit with reduced profits. That suggests many are prepared to adapt to difficult conditions, although there’s clearly a limit to how much additional cost any business can absorb.

“That also makes the broker’s role broader than establishing whether a mortgage is affordable at the point of application. Understanding how the borrower might respond if their costs rose or local rules changed can be just as useful, because those pressures can affect the long-term viability of the property even when the initial numbers look sound.”

To download a copy of The Cumberland’s inaugural Holiday Let Index, visit:

https://www.cumberland.co.uk/news/holiday-let-index-summer-2026