Self-catering letting options

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If you let a property for holiday purposes, the law allows you to do this without the occupiers gaining any rights to remain in the property under what is termed a ‘licence to occupy’. This is the same form of contract whereby guests stay at hotels. There is no limit to the length of time that someone can stay in a property under a licence to occupy, but their stay must actually be for a holiday. ‘Holiday letting’ is defined in the Housing Act 1988 as ‘a tenancy the purpose of which is to confer on the tenant the right to occupy the dwelling house for a holiday’.

You are recommended to have a basic agreement with the occupiers (this can be by letter), which includes a statement that you are letting the premises as a holiday let, with the start and end days of the let clearly stated.

Note: while there is no limit to the length of a holiday let, to comply with the Furnished Holiday Letting Rules (see the Tax status of accommodation businesses section) the letting must not be for longer than 31 continuous days.

If the occupier does not leave at the end of the let, legally you do not have to go to court to recover possession of the property. However, you may still be strongly advised to apply to the Courts for eviction.

If you are thinking of supplementing your income by letting your property for a number of months out of season, you can opt for:

• An assured tenancy;

• An assured shorthold tenancy.

Note: the Immigration Act 2016 requires you to check the immigration status of guests applying to occupy a property under a residential tenancy agreement. It is an offence to let your property under a residential tenancy agreement to anyone that you suspect is disqualified from occupying a property due to their immigration status. It is also important to note that you cannot only check people who you think are not British citizens. You must not discriminate against anyone because of where they are from.

Assured tenancy

Assured tenancies are designed to give tenants the right to remain in your property until you have reason, or grounds, to seek possession. The relevant grounds, in this case, would be that the property has been let temporarily ‘out of season’ (such lets are often called ‘winter lets’, although they occur during any time of the year).

There are two forms of assured tenancy:

• A periodic tenancy: this rolls over on a week-to-week or month-to-month basis.

• A fixed-term tenancy: this is a set period such as 12 or 18 months.

When a fixed-term tenancy expires, it continues as a periodic tenancy unless you sign up for a new fixed term.

Setting up an assured tenancy

You must give the tenant written notice before the start of the tenancy (or include a simple declaration in the tenancy agreement) that says the tenancy is not an assured shorthold tenancy, and that possession might be recovered on the basis of Ground 3 of the Grounds for Possession in the Housing Act 1988.

To ensure that you have a mandatory right to repossess a property if a tenant refuses to leave, the let must be for a period not exceeding eight months, and the property must have been used as a holiday let at some point in the preceding 12 months.

Ending an assured tenancy

You have the right to seek possession of the property at the end of the roll-over period or the fixed period of the tenancy.

If you seek possession, you must give written notice of at least:

• 28 days, if the guest pays rent weekly.

• One month, if the guest pays rent monthly.

If the tenant does not leave at the end of the notice, you must start court proceedings to recover possession of the property.

Assured shorthold tenancy

The more usual form of assured tenancy that landlords prefer to use is an assured shorthold tenancy. This allows you to seek possession even when there are no specific grounds for you to do so. However, this would mean that the tenant has the right to stay in the property on this basis for a minimum of six months (even if you have agreed a fixed term for less) or the length of the fixed term – whichever is longer.

There are no special procedures for setting up a shorthold tenancy, but you must give two months’ written notice to seek repossession. If the notice period expires and the tenant does not leave, you must still recover possession through the Courts. However, for recovering possession on a ‘no-ground’ assured shorthold basis, you can use the Accelerated Possession Procedure, which can be quicker and cheaper than a full court hearing.

Alternatively, you can set up a fixed-term out-of-season assured shorthold tenancy, by prior notice to the tenant, as for a full assured tenancy.

Note: to maintain the tax status of the property as a Furnished Holiday Let, the total period that a property is let under either an assured tenancy or an assured shorthold tenancy must be less than 155 days in any given year.

Note: remember that planning restrictions may have been imposed on you as a condition of permission being granted for the property’s use as a holiday let, which prevent the property from being used as a residential property.