At a time of increasing uncertainty in the agricultural sector, many rural-based businesses are reviewing their options for diversification. One popular option is the provision of holiday lets, benefiting from the devalued pound, historically low interest rates and the increasing popularity of the staycation.

Furnished Holiday Lettings (FHLs), an official HMRC designation, attract tax benefits and are relatively cheap and easy to establish. However, quality, marketing and an informed understanding of planning and tax implications are essential for success.

FHLs may be created in converted outbuildings or rural cottages, and the first consideration is what to offer. Demand is strongest for one- or two-bedroom cottages or large houses accommodating 20 or more, particularly in a tranquil location.

You don’t need planning permission to use an existing cottage, but if you're converting farm buildings, permission is required for change of use and associated building works. Ideally the location should be unobtrusive and well-placed, with access to power and water. Whatever route you take, involve the planners early on and establish the parameters of the project before thinking about design. This minimises costs by avoiding plans that have no chance of gaining permission.

So what should an FHL offer for maximum occupancy and turnover? Quality is crucial. Wi-fi, smart TVs, a reliable mobile signal and top-quality beds and linen are vital. Agas and Rayburns add kudos, and for winter open fires or woodburners are all but essential.

Provide flexibility by ensuring that at least one bedroom has a zip-lock bed that can be used as a double or two singles. Guests will expect a home-from-home, so don’t forget small things like corkscrews and tin-openers.

In order to qualify as an FHL, a property must be located in the UK or the EEA (although this could change with Brexit); furnished for normal occupation, and commercially let with the intention of generating a profit. The property must be made available for at least 210 days per year and occupied as such for at least 105 days.

Further information

Contact Savills Rural Services