THE PROPERTY FILTER TAKE
48% of mortgaged holiday let owners surveyed by Cumberland Building Society in May 2026 said their profitability rose after the FHL tax regime was abolished in April 2025.
Owners adjusted rather than exited: 47% raised their nightly rate and 46% pushed occupancy, yet 27% still reported profits down by 1% to 15%.
You may wish to rerun your own figures on post-April 2025 tax rules and check your nightly rate and occupancy against the guest trends below.
Nearly half of the mortgaged holiday let owners surveyed by Cumberland Building Society say their profits went up after the tax break went. 48% of them said profitability had risen since the Furnished Holiday Lettings (FHL) tax regime was abolished (Cumberland Holiday Let Index, Summer 2026). The index was published on 12 August 2026 and The Intermediary reported its findings again this month. A further 19% said profitability was broadly unchanged. The owners surveyed are not the whole market. Pegasus Insight ran the online survey for the lender in May 2026. It covered 50 private landlords and 50 homeowners, each with at least one mortgaged holiday let, plus 25 mortgage brokers.
What happened to holiday let profits after the FHL abolition?
The FHL regime gave qualifying short lets better tax treatment than other rental property. HMRC's policy paper says it ended on or after 6 April 2025 for Income Tax and Capital Gains Tax, and from 1 April 2025 for Corporation Tax (GOV.UK policy paper). A key change is the finance cost restriction: loan interest relief is now limited to the basic rate of Income Tax, as for other landlords.
Against that, the index breaks down how profitability moved. 33% of owners reported a rise of 1% to 15%, 11% a rise of 16% to 30% and 4% a rise of more than 30%. But 27% reported a fall of 1% to 15%, and 3% a fall of 16% to 30% (Cumberland Holiday Let Index). These are owners' own estimates of change, not audited accounts.
The largest group of gainers sat in the 1% to 15% band, and more than a quarter of owners went backwards. If you are weighing holiday lets against a standard let, our guide to property investment strategies sets out how the two models differ.
How did holiday let owners adapt?
Pricing and bookings were the most common responses. 47% of owners said they had increased their nightly rate and 46% had focused on raising occupancy (Cumberland Holiday Let Index). Some cut elsewhere: 34% reduced maintenance or capital expenditure, 26% changed their management approach and 19% switched to an interest-only mortgage.
Guest demand is shifting too. 50% of owners reported more last-minute bookings, 39% saw shorter stays and 39% said guests had become more price-sensitive. In practice, your listing may need pricing week by week rather than once a season.
Grant Seaton, head of intermediary lending at Cumberland Building Society, warned that yield is not the whole picture. "A strong gross yield does not automatically mean a strong business," he said in a statement reported by The Intermediary. 86% of owners put their gross rental yield (annual rent before costs, as a share of property value) at 5% or above. A property that relies on borrowing can be stress-tested with our free stress test calculator.
What regulation is coming for short-term lets?
The licensing requirement depends on where your listing sits. In Scotland, short-term lets need a licence from the local council, with a small number of exemptions. New hosts have needed one before taking bookings since 1 October 2022 (gov.scot).
In England, the Levelling-up and Regeneration Act 2023 requires the Secretary of State to make regulations for registering short-term rental properties (legislation.gov.uk). On 3 September 2026, Lisa Nandy told MPs the register would be "up and running in full by March". Mortgage Solutions and Propertymark both report that as March 2027 (Mortgage Solutions; Propertymark). 84% of respondents in the index said they were prepared for a national registration scheme.
Planning may be the bigger worry. The government has consulted on a separate planning use class for short-term lets in England, often called C5, giving councils more control over new holiday lets (GOV.UK consultation). 56% of owners said they would be very or somewhat likely to sell if it were introduced (Cumberland Holiday Let Index). Keeping your compliance paperwork in one system, as our business and systems guides cover, makes registration day simpler.
Key takeaways
48% of mortgaged holiday let owners surveyed by Cumberland Building Society in May 2026 reported higher profitability since the FHL tax regime ended in April 2025.
27% of the same owners reported profitability down by 1% to 15%, and 3% down by 16% to 30%.
47% of owners raised nightly rates and 46% focused on occupancy to adapt to the tax change.
England's short-term let register is due to be up and running in full by March 2027, as Mortgage Solutions and Propertymark report Lisa Nandy's words in Parliament on 3 September 2026.
56% of owners said they would be very or somewhat likely to sell if a separate C5 planning use class for short-term lets were introduced (the government's C5 consultation applies to England).
Frequently asked questions
When did the furnished holiday lettings tax regime end?
What changed for holiday let mortgage interest?
Who was surveyed in the Cumberland Holiday Let Index?
Do I need to register a holiday let in England?
Do holiday lets in Scotland need a licence?
