Tackling the housing crisis in North Devon has been a mission of mine for many years. I do not use the word crisis lightly, but there is no doubt that we have a crisis whilst we have such visible manifestations of it, such as families living in holiday parks.
I have worked with colleagues right down the Devon and Cornwall peninsula for a number of years to try and rebalance our housing markets. This work has been cross departmental, and having led on the amendment on holiday lets in the Levelling Up and Regeneration Bill, now Act; having made 23 speaking contributions regarding short term lets in Westminster since 2019, 58 contributions regarding housing in general, as well having written multiple letters to ministers, it was very welcome today to hear that that the tax regime between long term and short term rentals will now be harmonised.
In an ideal world I would have cancelled George Osborne’s tax reforms of 2016, which came into effect in 2020 and saw mortgage relief cancelled for long term rentals, with a specific exclusion for furnished holiday lets, as I believe we need to take steps to encourage long term landlords back to the market. However, the Chancellor has confirmed today that the government will remove the current incentive for landlords to offer short term holiday lets rather than longer term homes by abolishing the Furnished Holiday Lettings (FHL) tax regime. This will level the playing field between short term and long term lets and support people to live in and work their local area. This will take effect from April 2025 and draft legislation will be published in due course.
I recognise that for some short term holiday let owners, this is not a welcome piece of news. But we need to rebalance our housing market in North Devon so more families that want to live and work here can do so and we need to free up some of the properties that sit empty for large parts of the year to house local people. We have fantastic hotels, campsites, holiday parks as well as short term holiday lets – but we need staff to work in these businesses, as well as our other hospitality businesses to ensure our vital tourism sector continues to thrive. Whilst some may focus on this as a tax rise, I see it as a welcome nudge in the housing market. At a local level, even if only ten properties, as a result of these changes, say in Ilfracombe, switch from being holiday lets to full time homes it would be a positive step. That is ten families or individuals who have a home, who will be contributing and working in the community, ten families or individuals that will not be adding pressure to the rental market or be on the council’s housing list. When we reflect on budgets and tax changes, we often look at the big numbers, but we also need to look closer the effective nudges and behavioural changes. These potential ten families in Ilfracombe will have had their lives dramatically changed for the better.
I of course welcome further cuts in employee National Insurance payments, I would have liked to have seen a reduction in employer costs as well, but there were also welcome small increases in the VAT registration thresholds which will enable many smaller hospitality and tourism businesses trade for more of the year without paying VAT. I am sure we all welcome the extension to alcohol duty increases which will help particularly our much loved pubs.
The continuation of the fuel duty freeze is particularly important for rural areas like North Devon where we rely on our cars and likewise, I was pleased that the reduced higher rates of tax reliefs for theatres, orchestras, museums and galleries will be made permanent from 2025 when they were due to expire, which will support our local theatres.
I also welcome the announcement that the Household Support Fund will be extended to support households with the cost of living for a further six months. I have spoken out on this at Westminster and as Member of the Work and Pensions Select Committee about what a lifeline this has been. Whilst there is continued welcome news in the easing of the cost of living, energy bills coming down and inflation returning to 2% and below, we are not there yet, and this extension recognises this fact.
This was a budget that saw tax cuts but also investments in growth and productivity, and for us here in North Devon hopefully the start of a rebalancing of our housing market with the cancelling of the furnished holiday lets tax regime alongside the cut in capital gains tax.
