‘My holiday let empire is being hit with a £270k net zero bill under Labour'

Telegraph

18-07-2025

Britain's holiday home sector is taking blows from all sides. Between the scrapping of lucrative tax regimes, council tax surcharges and tourism levies, the cost of running a property business seems hardly worth it.
Now, thanks to Labour's decision to slap energy efficiency targets on holiday lets, the struggle will worsen.
Under laws initially proposed by the Tories, and ultimately revived by Ed Miliband, the energy secretary, rental homes must achieve a C-rated energy performance certificate (EPC) by the end of the decade.
Traditional buy-to-let landlords have had years to ready themselves for the changes, even as the Tories flip-flopped on whether or not they would enforce them. But short-term let landlords were caught off guard when Labour revealed they too would be brought into the EPC guidance from 2028.
Alistair Handyside, of the Professional Association of Self-Caterers (PASC), has seen the panic first hand.
'I've just finished a members' meeting in Portmeirion, in Wales, and the consensus in the room was that EPCs are the biggest threat that they've seen,' he says.
'It's bigger than having to change to keep up with fire regulations, it's bigger than the abolition of the furnished holiday let regime, and it's going to be more expensive than both.'
The looming targets pose a particular threat to landlords of converted farms, who were told to 'diversify' into holiday cottages by previous governments. Older buildings, including stables, annex cottages and listed buildings, are notoriously difficult to insulate or renovate.
Hefty EPC bills
Philip Trotter, 55, owns a cluster of 18 holiday cottages which were converted from stables 40 years ago. He anticipates Labour's EPC drive will cost him the maximum £15,000 per property – a total bill of around £270,000.
'That is an awful lot of money,' he says. 'I am looking at my profits for the seven years, and most of that will be spent achieving EPC C.'
Mr Miliband's EPC drive is set to cost landlords and taxpayers billions. Previous analysis of public EPC data by The Telegraph found that it would cost between £18.5bn and £36bn to renovate the country's 1.6 million private rental properties to meet net zero targets, excluding those unable to reach the C grade.
Announcing the targets, the Mr Miliband decried the 'Tory scandal' that had allowed private landlords to let 'cold draughty homes' to tenants.
The move was welcomed by renters' rights campaigners, but there is confusion amongst holiday let owners as to why the targets are necessary for cottages primarily used in the summer months.
Indeed, most of Trotter's bookings are in the summer, so his customers rarely use the heating. 'I'd be spending £270,000 to reduce costs by £1,000 a year,' he says. 'That would take hundreds of years to pay off. Where's the business sense in that?'
For Trotter, the decision to bring holiday lets within the scope for EPC targets remains a head-scratcher. 'I totally understand why they're bringing this in for long-term lets where the tenant is paying the heating costs, but our tenants aren't going to be affected by any money I spend on reaching grade C,' he says.
' Some are listed, so I can't double-glaze – what else am I meant to do?'
Residential property accounts for roughly 40pc of Britain's CO2 emissions, and efficiency targets are one of many ways Labour hopes to meet net zero by 2050. But how much difference imposing such targets on fishermen's cottages and converted stables will make is currently unclear.
Ben Spier, of Sykes Cottages, says: 'If you're a family of four flying to Spain, rather than staying in Britain, you'd be producing an additional two-and-a-half tons of CO2, which is the equivalent of heating a typical house for an entire year.'
A decline in holiday lets also threatens to devastate already fragile local economies. 'It doesn't stack up,' says Handyside, of PASC. 'You're forcing people to spend money and potentially harming microbusinesses for very little environmental gain'.
The EPC targets are just one weapon successive governments have deployed in their war on holiday lets, which former housing secretary, Michael Gove, said were turning seaside villages into 'an almost permanent Airbnb setting'.
In his final Budget, former chancellor, Jeremy Hunt, scrapped the furnished holiday let regime, forcing holiday lets owners to pay tax on their earnings in the same way as traditional buy-to-let landlords.
Another is the second home council tax premium, greenlit by the Tories and ushered in under Labour this year.
The barrage of tax raids are especially brutal for smaller holiday let owners like Julian Barnes, 76, who lets out the small cottage attached to his home in the Welsh village of Bodfari.
'We're paying about 40pc of gross income in council tax,' he says. 'We've been slapped with a massive bill, and unfortunately for us it's a typical one-size-fits-all approach from the Government.'
In theory, Barnes could pay business rates instead of council tax, but to do that, his property must be available to let for 140 days a year – and let for 70. But Barnes's cottage rarely meets this threshold, despite being available all year round.
Despite being effectively a granny flat, the property is classed as a second home for tax purposes, and will have to achieve an EPC C grade by 2028.
'The heating costs for the cottage were just £237 last year because people don't tend to come outside of the warmer months,' Barnes says.
The pensioner anticipates spending the maximum £15,000 to upgrade the property – not that it would make much difference. An assessor recently told him that the most he would be able to raise his score by would be two points, which would still leave him with an F-rated certificate.
'It would be ludicrous to spend that sort of money,' Barnes says. 'What sort of savings could we make on that cost?'
Since the cottage is attached to their primary home, Barnes and his wife would have to sell up and move away to avoid the hefty renovation costs.
'We thought the holiday home would provide a bit of extra income and give us a bit more control, and to make sure we aren't dependent on other things,' he says. 'We don't claim any benefits besides the state pension, and we'd prefer to keep it that way.'
'We can't work two years for nothing'
Ken Williamson, 67, who runs Askrigg Cottage Holidays with his wife, Sue, has owned two holiday cottages in North Yorkshire since the mid-2000s, before the EPC regime began.
The village they operate in is home to about 500 people, and around 30 holiday cottages. Most of the homes, Williamson argues, would not be suitable for people to live in full-time. If he sold up, the buildings would likely be bought as second homes.
'I've no idea what our EPC scores are,' he says. 'They're old buildings and one of them is listed, so their scores are probably between 20 and 30, which would give them an F'.
Even if Williamson and his wife were to take advantage of government grants for heat pumps and the like, there is little chance the green technology would work effectively in such old buildings.
'Heat pumps are suited for continuous occupation, and we have a different customer every week,' he says.
The age of the buildings means insulation is out of the question, let alone solar panels. 'I can see modern buildings have that insulation built into them, but older buildings have to be practically demolished to do that,' says Williamson.
Older buildings tend to have solid walls, compared to the cavity walls of newer homes. The only way to insulate solid walls is to add a wraparound layer either externally or internally, which might spoil the exterior of the home or shrink the size of its rooms.
Either way, the process is far more expensive than cavity wall insulation. Williamson estimates each of his cottages makes £15,000 annually, meaning renovations would wipe out a year's profit.
'We can't work two years for nothing. We meet some nice people, and we want to keep doing this into our old age,' Williamson says. 'But if these reforms come in as they are, we'll pack it all in.'
A Department for Energy Security and Net Zero spokesman said: 'We have consulted widely on our plans for private rented homes to achieve energy performance certificate C or equivalent by 2030, including those representing the short-term letting industry.
'The consultation has now closed, and we will consider the evidence received. We will set out our position as part of the consultation response in due course.'