Guide to furnished holiday lets

Categories: holiday lets | guides | holiday let guides

Furnished holiday lets (FHLs) are short-term rental properties typically targeted at the holiday sector. The FHL tax regime may have been abolished, but these properties are still subject to different rules than standard buy to let properties and also require a specific holiday let mortgage.

Rather than focusing on HMRC criteria, this article covers typical mortgage requirements for holiday let properties – still informally known in some circles as FHLs, despite the end of said tax regime.

In Scotland, you are required to have a licence to operate a holiday let.

In the following guide, we’ll take a deeper dive into this subject and address questions such as:

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What are the criteria for furnished holiday lets?

In April 2025, the FHL tax regime was abolished, meaning that the HMRC criteria for a property to be classed as an FHL no longer apply. 

Nonetheless, many lenders have their own criteria to assess whether a property genuinely operates as a holiday let before offering the relevant mortgage. 

In general, lenders expect the property to be:

Furnished to a standard suitable for holiday occupancy — the property should be ready for guests to use without needing to supply their own furnishings.

Let on a short-term basis — lenders want to see that the property is used for holiday and short-term rentals, rather than long-term tenancies under an Assured Periodic Tenancy (APT) agreement.

Specific requirements – such as minimum expected occupancy levels or restrictions on personal use – vary between lenders. A specialist broker can help you understand which lenders are likely to consider your property and on what terms.

Please note, Commercial Trust can only help with holiday let mortgages on properties in the UK.

Can you get a furnished holiday let mortgage?

Holiday let mortgages are used to acquire properties that will be let to short-term tenants, including tourists. To qualify, you must meet the requirements outlined above, as well as those put forward by the lender.

Most lenders require a deposit of at least 25%, equating to a loan-to-value (LTV) of 75%, but deposits can be from an absolute minimum of 20%. The total amount you can borrow will depend on the rental income, which in turn can vary based on everything from the property size to the location.

You can use our calculator to check today’s holiday let mortgage rates.

Stamp duty is also payable, and it is charged at the residential rate and not the commercial rate. Like buy to let mortgages, holiday lets are subject to a 5% surcharge if they are worth more than £40,000. So, even if your holiday let is worth less than £125,000, which would be enough to exclude you from stamp duty on a first home, you will still be charged this tax surcharge.

You can use our buy to let stamp duty calculator here.

How Commercial Trust can help you

Whether you’re a first time holiday let landlord or an experienced property owner seeking some advice, Commercial Trust can help. Our experts are well-versed in buy to let mortgages, bridging loans, commercial mortgages, and, of course, holiday let mortgages.

Get in touch today to learn more.

FAQs

Also known as holiday cottage mortgages, furnished holiday let mortgages are for properties used for short-term rentals, such as holiday accommodation.

The tax treatment of furnished holiday lets is changed in April 2025 to align with changes in taxation for long term lets. Where they were previously automatically treated as a business, this will is now not be the case in the future. The details are summarised in our Guide to holiday let taxes. Investing via a limited company may become more tax efficient for some people as a result of the changes. Seek professional tax advice to understand your own circumstances.

Holiday lets are effectively taxed in the same way standard rental properties are, as of April 2025. Revenue expenses can be claimed for (e.g. ongoing running costs like utilities, insurance, repairs, etc.) and replacement of domestic items relief is still in place, which covers like-for-like replacements of things like fridges, freezers, dishwashers, washing machines.

Yes, you may be allowed to stay in your holiday let, subject to your lender’s terms. Typically, the limit for a landlord to stay in their own holiday let is 30 days.