If it becomes difficult to meet these conditions (which many landlords found during COVID-19 when there was a slump in hospitality), there are two elections available to help retain FHL status.
The averaging election is available for landlords who let more than one property as an FHL, where one or more such properties does not meet the letting condition of 105 days. The election allows you to take the average number of let days and apply it to all of your holiday lets, so that they potentially all meet the letting condition.
Period of Grace Election
If you’ve failed to let your property for the required 105 days, you can make a Period of Grace election to treat your property as though it was let for this period. To do so, your property must have qualified as an FHL in the previous year and you must have had a genuine intention to meet the 105-day requirement in the current year. For example, you could prove this by showing you’ve marketed the property to the same or a greater level than in successful years. This election can be renewed for a second year, but the initial election must be made in the first year of failing to meet the letting condition.
For example, if the property qualified as an FHL in 2020/21 but didn’t meet the letting condition for 2021/22, you must make a valid election for 2021/22 before making one for 2022/23.
Deadlines for making an election for 2021/22
Both the Period of Grace and Averaging elections must be made on or before the first anniversary of the normal Self-Assessment filing date of the tax year concerned. For the 2021/22 tax year, this deadline is 31 January 2024 and is therefore still available but fast-approaching.