With the rise in domestic tourism and the popularity of short-term rental platforms, holiday let investments have become a lucrative option for property buyers across the UK. If you’re thinking of purchasing a holiday home this summer — whether by the coast, in the countryside, or near a major tourist destination — it’s essential to factor Stamp Duty Land Tax (SDLT) into your budget.
Holiday lets are classed as second homes for tax purposes, which means they come with higher Stamp Duty costs than primary residences. Here’s what investors need to know before diving into the holiday let market in 2025.
What Counts as a Holiday Let?
A holiday let is a property purchased for the purpose of being rented out on a short-term basis to holidaymakers. This can include cottages, apartments, or houses that are not used as your main residence and are instead let out commercially — often through platforms like Airbnb, Booking.com, or local rental agencies.
To qualify as a Furnished Holiday Let (FHL) for tax purposes, the property must meet certain conditions:
- It must be available for letting at least 210 days per year
- It must be actually let to the public for at least 105 days
- It must be furnished and available on a short-term basis
Even if you qualify for FHL tax treatment for income tax purposes, for Stamp Duty, the property is typically still considered a second home.
How Stamp Duty Applies to Holiday Let Purchases
If you already own a home and are purchasing a property to use as a holiday let, you will pay the standard SDLT rate plus a 3% surcharge on the entire purchase price.
Current SDLT Rates for Second Homes (as of 2025):
| Property Price Band | Standard Rate | Holiday Let (with 3% surcharge) |
|---|---|---|
| Up to £250,000 | 0% | 3% |
| £250,001 – £925,000 | 5% | 8% |
| £925,001 – £1.5m | 10% | 13% |
| Over £1.5m | 12% | 15% |
Example:
If you buy a holiday let for £400,000, your SDLT would be:
- First £250,000 @ 3% = £7,500
- Remaining £150,000 @ 8% = £12,000
Total SDLT = £19,500
Are There Any Reliefs Available?
Unfortunately, most Stamp Duty reliefs do not apply to holiday lets. That means:
- First-time buyer relief cannot be claimed
- Multiple dwellings relief might apply if buying more than one unit, but this is complex and depends on the property structure
- Mixed-use property (residential + commercial) might allow for a different SDLT treatment, but standard holiday lets usually don’t qualify
Always consult a tax or legal professional if you’re unsure whether your property qualifies for any exceptions.
Key Considerations for Summer Holiday Let Buyers
1. Budget for SDLT Early
Factor Stamp Duty into your financial planning from the outset — it’s a major upfront cost that can affect your cash flow and ROI.
2. Understand Local Licensing Rules
Many tourist destinations now require short-term let licenses or planning permission. SDLT is just one of many costs to plan for.
3. Use a Stamp Duty Calculator
Use our Stamp Duty Calculator to estimate what you’ll owe based on your property’s location, price, and use.
4. Explore the Tax Benefits
While SDLT costs may be higher, holiday lets may qualify for income tax deductions, capital allowances, and capital gains tax reliefs if classed as Furnished Holiday Lets. Speak to an accountant for advice.
Final Thoughts
Buying a holiday let can be a smart investment — especially during peak travel seasons — but understanding Stamp Duty implications is crucial to avoiding surprises. The 3% surcharge on second homes can significantly increase your upfront costs, so be sure to factor it into your offer and budget.
Before you buy, run the numbers using our Stamp Duty Calculator to make sure your summer investment is as financially sound as it is scenic.