The UK government has launched a consultation on granting regional Mayors the authority to introduce an overnight levy on holiday accommodation providers across England. This potential new power could affect landlords and agents managing short-term lets, as it may increase costs and impact the local rental market. Understanding these developments is essential for landlords to prepare for possible changes in regulation and taxation.

New Powers for Regional Mayors

The Ministry of Housing, Communities and Local Government has confirmed that any overnight levy would apply to a range of accommodation providers, including hotels, holiday lets, bed and breakfasts, and guesthouses. Secretary of State Steve Reed emphasised the opportunity for Mayors to use tourism as a source of funding for local priorities, stating: “Tourists travel from near and far to visit England’s brilliant cities and regions. We’re giving our mayors powers to harness this and put more money into local priorities, so they can keep driving growth and investing in these communities for years to come.”

London Mayor Sadiq Khan welcomed the consultation, highlighting the potential benefits for the capital’s economy. He noted that the levy could help support London’s status as a global tourism and business destination and stressed the importance of collaboration with the hospitality and tourism sectors to maximise the levy’s benefits.

Implications for Landlords and Holiday-Let Owners

While the introduction of an overnight levy could provide additional funding for local authorities, industry representatives have raised concerns about the impact on holiday-let owners. Nathan Emerson, chief executive of Propertymark, cautioned that such a levy might place further financial pressure on property owners already operating with tight margins. He advised landlords and agents in tourist hotspots to monitor the consultation closely and contribute their views, particularly since local exemptions may be possible.

Emerson explained that increased costs from the levy could influence behaviour in the housing market, affecting demand and supply across rentals, sales, second homes, and short-term lets. This is a critical consideration for landlords managing holiday lets, as any additional charges could reduce the attractiveness and flexibility of their properties.

Lessons from Scotland’s Overnight Levy

Propertymark pointed to Scotland’s experience as a cautionary example. From July 2026, Edinburgh will implement a 5% overnight visitor levy under the Visitor Levy (Scotland) Act. Emerson warned that without strong integration with wider tourism and housing strategies, such levies have led to higher costs, reduced accommodation supply, and fewer options for tenants and visitors.

He emphasised the need for improved regulation, such as the forthcoming short-term lets register, to create a level playing field between short-term and long-term rentals while protecting consumers. However, he also highlighted that increasing taxes on private landlords, second-home owners, and additional property purchasers will not resolve underlying housing challenges.

For landlords, this underlines the importance of engaging with policymakers to ensure that any overnight levy schemes are aligned with local tourism plans and broader economic policies. Failure to do so risks repeating the difficulties seen in Scotland, potentially discouraging investment and limiting housing choices.

Next Steps and Consultation Details

The government consultation on the overnight visitor levy is open until February. Landlords and agents with interests in holiday lets are encouraged to participate to help shape a fair and effective system. The consultation covers how the levy might be applied and the scope for local exemptions.

TLA Update

The Landlord Association (TLA) is launching a new Trusted Partners Hub in Q1 2026. This platform will feature verified and approved service providers selected to support landlords, tenants, and property management businesses. Legal, trades, insurance, financial, mortgage, tenant screening, and other service providers are invited to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/

Understanding the potential overnight levy and engaging with the consultation will be crucial for landlords managing holiday lets to navigate forthcoming changes effectively and safeguard their investments.