A question we are often asked by potential new holiday let owners is, “Why don’t I buy a holiday let and live in it whenever I want?” It’s a win-win situation, isn’t it? You can sporadically welcome guests into your holiday let and earn some extra income, while also living there parttime when it suits you.
What many people don’t know is that there are strict rules around living in your own holiday let property and generally speaking, it’s not permitted. In this article, we will discuss the restrictions around holiday let occupancy and what you are allowed to do.
Why can’t I live in my holiday let?
There are two main things to think about when it comes to holiday let occupancy restrictions:
If you want to operate your cottage as a proper furnished holiday let (FHL), then you must follow HMRC’s rules about the minimum number of guest bookings. According to HMRC, “Your property must be available for letting as furnished holiday accommodation letting for at least 210 days in the year,” and, “You must let the property commercially as furnished holiday accommodation to the public for at least 105 days in the year.”
In other words, your holiday let must be free to welcome guests for a large chunk of the year. Plus, you have to think about the pattern of occupancy; you are allowed to rent out your property for a longer length of time (31 days according to HMRC), but there is a limit on the number of days per annum that you’re allowed to do this.
2. Mortgage lenders
If you have a mortgage on your holiday let and you want to rent your home out to paying guests, then you must make sure you have a holiday let mortgage, which offers the correct permission to suit that letting activity. Such holiday let mortgages do not allow you to live in the property as your main residence, so you must have another place to stay.
This is because a holiday let mortgage is a specific type of mortgage and is viewed as a business investment. As such, you have the advantage of being eligible for the tax benefits that go with it. However, while you cannot live in your holiday let, you are permitted to make ‘owner bookings’, so long as the number of these and your usage doesn’t impact the number of guest bookings required by HMRC.
Making a few owner bookings each year is a great idea and very much part of the appeal of owning a holiday let, as you’ll be able to experience your holiday home and the local area as guests would. This gives you a great opportunity to ensure that everything is in place to provide an excellent stay, plus, the added bonus of a holiday with the ultimate convenience!
What about a mixed use residential?
Things are slightly different if you own a ‘mixed used residential’ property. This is a scenario where, for example, you have a main farmhouse that you live in as your full-time home, but you have two converted outbuildings that are running as holiday lets, all sat on the same property land title.
In this scenario, so long as the footprint of the main farmhouse is 40% or more of the overall plot, then you would be eligible for a mixed used residential mortgage which would allow you to both live in the main house and continue to let the outbuildings. This type of mortgage is normally a regulated residential mortgage, just slightly modified to permit holiday letting of the other units.
If your converted outbuildings are sat on their own land titles, then you would need to get holiday let mortgages for those. You should also keep in mind that mortgage lenders will generally reject applications for separate buildings that aren’t structurally solid or permanent fixtures, such as log cabins or shepherd’s huts. The same goes for older buildings that haven’t been built to today’s strict standards and therefore don’t provide enough security for the mortgage lender.
If you want to know more about getting a holiday let mortgage on a property that you already own or a new property, get in touch here and we can help to get you started.
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The information contained in this article is accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time and so please speak to one of our Consultants to confirm the most accurate up to date information. Nothing in this article constitutes financial advice. You understand that by clicking any external links on this page that you will be leaving the website of Holiday Cottage Mortgages and we cannot be held responsible for the content of this external website. Please always consult your accountant or solicitor for all financial, taxation or legal matters.