There are strict rules for a property rental business to qualify as furnished holiday lettings. The most important conditions are:
- Property must be situated in the UK or European Economic Area (EEA)
- Furnished and let on a commercial basis
- Available for letting for 210 days a year
- Actually let for 105 days a year
- Not normally let for more than 31 consecutive days to the same person (i.e. short lets)
- In other words lettings in excess of 31 days are excluded from the 105 day test as are periods let to family and friends on a non-commercial basis
For individual landlords the 210 day and 105 day tests apply to the tax year or the first 12 months on commencement of the rental business.
If the 105 day test is not met it is possible to make a “pooling” or averaging election where several FHL properties are rented out in the tax year. You can elect to apply the letting condition to the average rate of occupancy for all the properties you let as FHLs. There are separate elections or pools of UK and EEA properties.