{"id":3138,"date":"2025-12-03T16:29:50","date_gmt":"2025-12-03T16:29:50","guid":{"rendered":"https:\/\/www.mygetaways.co.uk\/blog\/?p=3138"},"modified":"2026-02-10T15:20:27","modified_gmt":"2026-02-10T15:20:27","slug":"budget-2025-the-renters-rights-act-why-short-term-rentals-now-make-more-sense-than-ever","status":"publish","type":"post","link":"https:\/\/www.mygetaways.co.uk\/blog\/budget-2025-the-renters-rights-act-why-short-term-rentals-now-make-more-sense-than-ever\/","title":{"rendered":"Budget 2025 &amp; the Renters\u2019 Rights Act: Why Short-Term Rentals Now Make More Sense Than Ever"},"content":{"rendered":"\n<p>Rachel Reeves\u2019 Autumn Budget on 26th November landed at a tough moment for confidence \u2013 late in the year, with Christmas trading already under pressure, and households still feeling the cost-of-living squeeze.<\/p>\n\n\n\n<p>For property owners, the picture is clear:<strong> taxes and regulations on traditional long-term lets are going up<\/strong> \u2013 just as the <strong>Renters\u2019 Rights Act<\/strong> from May 2026 locks in far less flexibility.<\/p>\n\n\n\n<p>Against that backdrop, <strong>professionally managed short-term rentals (STRs)<\/strong> and serviced accommodation stand out as one of the strongest ways to keep your property assets working for you.<\/p>\n\n\n\n<h2 id=\"the-budget-in-a-nutshell-what-changed-for-landlords\">The Budget in a nutshell: what changed for landlords<\/h2>\n\n\n\n<h3 id=\"1-higher-tax-on-rental-income\">1. Higher tax on rental income<\/h3>\n\n\n\n<p>From April 2027, tax on property income rises by <strong>2 percentage points<\/strong>:<\/p>\n\n\n\n<ul><li>22% \u2013 basic rate<\/li><li>42% \u2013 higher rate<\/li><li>47% \u2013 additional rate<\/li><\/ul>\n\n\n\n<p>This is on top of frozen income tax thresholds to 2030\/31, which quietly pull more people into higher bands as wages rise. <a href=\"https:\/\/www.ft.com\/content\/7c367b3d-4d68-4158-8102-a0ed0933ae89\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Financial Times has more here<\/a><\/p>\n\n\n\n<p><strong>Impact:<\/strong><br>Landlords are hit twice \u2013 more of their income is taxed at a higher rate, and each pound of rental profit is worth less after tax.<\/p>\n\n\n\n<h3 id=\"2-mansion-tax-on-higher-value-homes\">2. Mansion tax on higher-value homes<\/h3>\n\n\n\n<p>From April 2028, a new annual <strong>\u201cmansion tax\u201d<\/strong> applies on homes worth over \u00a32m, starting at \u00a32,500 a year and rising with value bands.<\/p>\n\n\n\n<p><strong>Impact:<\/strong><br>If you own a higher-value property, your holding costs rise regardless of whether it\u2019s sitting empty, on a low-yield AST or earning strong income \u2013 which makes <strong>underperforming long-term lets harder to justify<\/strong>.<\/p>\n\n\n\n<h3 id=\"3-business-rates-a-small-win-for-hospitalit\">3. Business rates \u2013 a small win for hospitalit<\/h3>\n\n\n\n<p>From 2026\/27, around <strong>750,000 retail, hospitality and leisure properties<\/strong> get a permanently lower business rates multiplier than other sectors.<a href=\"https:\/\/www.gov.uk\/government\/news\/strong-foundations-secure-future-a-budget-that-delivers-on-the-countrys-priorities\" target=\"_blank\" rel=\"noreferrer noopener\"> More on this at GOV.UK<\/a><\/p>\n\n\n\n<p><strong>Impact:<\/strong><br>If your property qualifies as holiday accommodation\/serviced apartments and sits on the <strong>business rates list<\/strong>, you may pay less in property tax than an equivalent asset used as a standard buy-to-let paying council tax.<\/p>\n\n\n\n<h3 id=\"4-labour-costs-and-the-overnight-visitor-levy\">4. Labour costs and the overnight visitor levy<\/h3>\n\n\n\n<ul><li>The <strong>National Living Wage<\/strong> rises again in April 2026, increasing staff costs for cleaning, maintenance and hospitality roles.<\/li><li>Mayors in England are being given powers to introduce an <strong>overnight visitor levy<\/strong> on hotel rooms and short stays, likely a small per-night charge in certain regions.<\/li><\/ul>\n\n\n\n<p><strong>Impact:<\/strong><br>Labour-intensive, low-margin operations will struggle most. Agile STR operators who can optimise pricing and keep overheads lean are best placed to absorb these changes.<\/p>\n\n\n\n<h2 id=\"the-real-game-changer-the-renters-rights-act-from-may-2026\">The real game changer: the Renters\u2019 Rights Act from May 2026<\/h2>\n\n\n\n<p>The <strong>Renters\u2019 Rights Act 2025<\/strong> (formerly the Renters\u2019 Reform Bill) is one of the biggest overhauls of private renting in decades. Key measures start from <strong>1 May 2026<\/strong> in England and you can read more about them on the<a href=\"https:\/\/www.gov.uk\/government\/publications\/guide-to-the-renters-rights-act\"> Government&#8217;s websites here<\/a><\/p>\n\n\n\n<p>Here\u2019s what it means for <strong>long-term landlords<\/strong>:<\/p>\n\n\n\n<h3 id=\"1-end-of-section-21-no-fault-evictions\">1. End of Section 21 \u201cno-fault\u201d evictions<\/h3>\n\n\n\n<p>From May 2026, <strong>Section 21 notices are abolished<\/strong>. Landlords can no longer end a tenancy without giving a specific legal reason.<\/p>\n\n\n\n<p>You\u2019ll only be able to regain possession using <strong>Section 8 grounds<\/strong>, such as:<\/p>\n\n\n\n<ul><li>Serious rent arrears<\/li><li>Anti-social behaviour<\/li><li>Needing to sell or move in yourself \/ a family member<\/li><\/ul>\n\n\n\n<p>These grounds are being broadened but will still require <strong>clear evidence and more process<\/strong> than a simple Section 21.<\/p>\n\n\n\n<p><strong>Impact on flexibility:<\/strong><br>You lose the ability to exit a difficult tenancy quickly just because your circumstances change or the tenant relationship deteriorates.<\/p>\n\n\n\n<h3 id=\"2-fixed-terms-scrapped-rolling-tenancies-as-standard\">2. Fixed terms scrapped \u2013 rolling tenancies as standard<\/h3>\n\n\n\n<p>Fixed term Assured Shorthold Tenancies are being replaced by <strong>Assured Periodic Tenancies<\/strong>:<\/p>\n\n\n\n<ul><li>Most tenancies will be <strong>open-ended from day one<\/strong>.<\/li><li>Existing fixed terms will convert to periodic once the Act applies.<\/li><li>Tenants can usually leave with <strong>two months\u2019 notice<\/strong>; landlords, in contrast, must use statutory grounds.<\/li><\/ul>\n\n\n\n<p><strong>Impact on flexibility:<\/strong><br>You have <strong>less control over timings<\/strong>.<br>Tenants can come and go relatively easily; you may face long, drawn-out possession processes if things go wrong.<\/p>\n\n\n\n<h3 id=\"3-tightened-rules-on-rent-and-marketing\">3. Tightened rules on rent and marketing<\/h3>\n\n\n\n<p>From 2026, the Act introduces further constraints:<\/p>\n\n\n\n<ul><li><strong>Rent increases<\/strong> limited to once per year via a formal process, with at least <strong>two months\u2019 notice<\/strong> and the right for tenants to challenge above-market rises.<\/li><li><strong>No rent bidding<\/strong> and restrictions on taking large sums up front.<\/li><li>More <strong>paperwork and compliance<\/strong>: for example, providing tenants with official guidance on their new rights at the start of the tenancy.<\/li><\/ul>\n\n\n\n<p><strong>Impact on flexibility &amp; returns:<\/strong><\/p>\n\n\n\n<ul><li>Raising rent to keep pace with wage, tax and mortgage rises becomes slower and more bureaucratic.<\/li><li>Any mis-step on paperwork could make it harder to enforce your rights.<\/li><\/ul>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<h2 id=\"why-short-term-rentals-look-stronger-in-this-new-landscape\">Why short-term rentals look stronger in this new landscape<\/h2>\n\n\n\n<p>Put the <strong>Budget<\/strong> and <strong>Renters\u2019 Rights Act<\/strong> together and a pattern appears:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote\"><p><strong>Long-term AST-style letting is becoming a high-tax, high-regulation, low-flexibility game.<\/strong><\/p><\/blockquote>\n\n\n\n<p>Short-term rentals, when structured correctly as holiday\/serviced accommodation, typically sit <strong>outside the Assured Shorthold Tenancy regime<\/strong> \u2013 and therefore outside many of these new constraints. Always check local rules, but in general:<\/p>\n\n\n\n<h3 id=\"1-higher-yields-to-offset-higher-tax\">1. Higher yields to offset higher tax<\/h3>\n\n\n\n<ul><li>A well-run STR can often generate <strong>1.5\u20132.5x the gross income<\/strong> of a comparable long-term let, depending on location and seasonality.<\/li><li>Even after higher operating costs, the <strong>net profit before tax<\/strong> is usually stronger \u2013 and that\u2019s what really matters once property income is taxed at 22\/42\/47%.<\/li><\/ul>\n\n\n\n<p>If the government is taking a bigger slice, the simplest response is:<br><strong>make the slice bigger.<\/strong><\/p>\n\n\n\n<h3 id=\"2-flexibility-on-pricing-and-use\">2. Flexibility on pricing and use<\/h3>\n\n\n\n<p>Because STR guests are on <strong>short licences\/booking terms<\/strong>, not ASTs:<\/p>\n\n\n\n<ul><li>You\u2019re free to <strong>adjust nightly rates<\/strong> with demand, events and inflation.<\/li><li>You can decide <strong>when to take the property in or out of service<\/strong> \u2013 for refurbishment, personal use, or sale \u2013 without navigating the Renters\u2019 Rights possession rules.<\/li><\/ul>\n\n\n\n<p>That combination of <strong>pricing flexibility plus control over the asset<\/strong> is exactly what long-term landlords are losing from 2026.<\/p>\n\n\n\n<h3 id=\"3-potential-business-rates-advantages\">3. Potential business rates advantages<\/h3>\n\n\n\n<p>Where an STR qualifies as a self-catering or serviced accommodation business on the <strong>non-domestic rating list<\/strong>, the Budget\u2019s commitment to permanently lower hospitality\/retail business rates from 2026 can be a genuine win.<\/p>\n\n\n\n<p>Compared with:<\/p>\n\n\n\n<ul><li>Higher council tax and<\/li><li>Heavier regulation under the Renters\u2019 Rights Act<\/li><\/ul>\n\n\n\n<p>\u2026this can tilt the numbers decisively in favour of a professional STR model.<\/p>\n\n\n\n<h3 id=\"4-resilience-under-a-future-tourist-tax\">4. Resilience under a future tourist tax<\/h3>\n\n\n\n<p>A modest <strong>overnight levy<\/strong> will hit hotels hardest, because:<\/p>\n\n\n\n<ul><li>Their fixed costs are high.<\/li><li>They rely more heavily on corporate and conference trade, which is price sensitive.<\/li><\/ul>\n\n\n\n<p>A well-positioned STR can usually:<\/p>\n\n\n\n<ul><li>Still undercut a hotel on a <strong>per-guest, per-night<\/strong> basis, and<\/li><li>Offer the space, kitchen and \u201chome feel\u201d that value-conscious domestic travellers are looking for.<\/li><\/ul>\n\n\n\n<p>That makes your revenue line <strong>more resilient<\/strong> even if a visitor levy appears in your area.<\/p>\n\n\n\n<h2 id=\"what-property-owners-should-do-now\">What property owners should do now<\/h2>\n\n\n\n<h3 id=\"1-run-the-numbers-on-str-vs-ast\">1. Run the numbers on STR vs AST<\/h3>\n\n\n\n<p>Pick one property and compare:<\/p>\n\n\n\n<ul><li><strong>Current AST rent<\/strong> and costs (mortgage, insurance, repairs, compliance).<\/li><li><strong>Projected STR income<\/strong> using realistic nightly rates and occupancy for your area.<\/li><li>Apply the new <strong>22\/42\/47% tax rates<\/strong> to both scenarios.<\/li><\/ul>\n\n\n\n<p>In many markets, that exercise alone is enough to show how much income you\u2019re leaving on the table with a standard long-term let.<\/p>\n\n\n\n<h3 id=\"2-map-your-legal-position\">2. Map your legal position<\/h3>\n\n\n\n<ul><li>Check whether your property can legitimately be operated as <strong>short-term or holiday accommodation<\/strong> under local planning and licensing rules.<\/li><li>Confirm your <strong>council tax vs business rates<\/strong> position and whether moving to non-domestic rates is possible and beneficial.<\/li><li>Understand how the <strong>Renters\u2019 Rights Act phases<\/strong> apply to your existing tenancies ahead of May 2026.<\/li><\/ul>\n\n\n\n<h3 id=\"3-decide-whether-to-self-manage-or-partner\">3. Decide whether to self-manage or partner<\/h3>\n\n\n\n<p>With higher wage costs and more complex rules, the case for <strong>professional management<\/strong> is stronger than ever:<\/p>\n\n\n\n<ul><li>Centralised cleaning and maintenance<\/li><li>Revenue management and dynamic pricing<\/li><li>Multi-channel marketing and review management<\/li><li>Compliance handled by people who live and breathe the regulations<\/li><\/ul>\n\n\n\n<p>Yes, there\u2019s a fee \u2013 but if your <strong>total revenue jumps<\/strong> and the regulatory risk drops, your <strong>net position<\/strong> often improves.<\/p>\n\n\n\n<h2 id=\"ready-to-future-proof-your-property-strategy\">Ready to future-proof your property strategy?<\/h2>\n\n\n\n<p>Budget 2025 and the Renters\u2019 Rights Act send a clear message:<\/p>\n\n\n\n<ul><li><strong>Owning property<\/strong> is still a powerful way to build wealth.<\/li><li>But <strong>traditional long-term letting<\/strong> is being squeezed on all sides \u2013 tax, flexibility and compliance.<\/li><li><strong>Short-term rentals<\/strong>, run professionally, offer higher earning potential and more control at the exact moment owners need both.<\/li><\/ul>\n\n\n\n<p><strong>Whether you\u2019re looking to increase income, streamline operations, or simply reclaim your time, My Getaways has the comprehensive solutions you need for <a href=\"https:\/\/www.mygetaways.co.uk\/rent-your-property\">property management in Brighton<\/a> and Sussex. Let\u2019s discuss how we can transform your property into a thriving Brighton short-term rental.<\/strong><\/p>\n\n\n\n<p><strong>Get in touch for a complimentary, no-pressure chat holiday rental management in Brighton to earn you more with My Getaways.<\/strong><\/p>\n\n\n\n<p><strong>+44 (0) 1273 917 909<\/strong><strong><br><\/strong><strong>owners@mygetaways.co.uk<\/strong><\/p>\n\n\n\n<p><strong>We\u2019re excited to help you unlock the full potential of your holiday let!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Budget 2025 &#038; the Renters\u2019 Rights Act: Why Short-Term Rentals Now Make More Sense Than Ever<\/p>\n","protected":false},"author":3,"featured_media":3143,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[82,17],"tags":[24,102,103],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.10 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Budget 2025 &amp; 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