Property owners are increasingly converting second homes into short-term holiday lets following council tax reforms introduced in 2025, according to housing campaign group Generation Rent.
The organisation has called on the Government to grant councils additional powers to license and limit short-term holiday accommodation, arguing that current tax structures are directing properties away from long-term residential use.
Tax differential drives conversions
Under reforms implemented in 2025, local authorities gained the ability to impose up to a 200% premium on second homes through council tax. However, many holiday lets qualify for small business rate relief, which typically results in lower costs than standard council tax.
To classify a property as a holiday let, owners must make it available for short-term letting for at least 140 nights annually and achieve actual lettings of 70 nights per year.
Generation Rent states this creates “tax advantages that make holiday lets more profitable for landlords than residential tenancies.”
Scale of the market
Data from 2022 indicates England had more than 330,000 holiday homes, representing approximately 7% of the private rented sector. The numbers continue to grow in coastal areas of South West England and Norfolk, as well as in London.
The campaign group argues that the expansion of Airbnb-style short-term rentals has displaced families from their communities as properties are repurposed for tourist accommodation, particularly in high-demand coastal and urban locations.
Licensing proposals
Generation Rent is advocating for enhanced licensing controls that would enable councils to regulate the balance between tourism accommodation and permanent housing supply in their areas.
The proposals come as housing pressures intensify in popular tourist destinations, where the conversion of residential properties to holiday lets continues to reduce available long-term rental stock.
