Thinking of renting out your farm building to holidaymakers? Here's what you need to know
Thinking of taking in holidaymakers as another income stream? Here's what you need to know.
As an insurance broker, you will naturally want to support your clients in making their business a success – and as the farming industry faces challenges such as the removal of the Basic Payment Scheme, succession planning and inheritance tax, you may find that your agricultural clients are looking to diversify their business to capitalise on new income streams.
Below, we share our tips on renting your property such as a cottage, shepherd’s hut, chalet or renovated barn out to holidaymakers – please feel free to share these with your clients, and remember that the Geo team are here to support you across all of our specialist teams including Agriculture, Construction & Renovation, Lifestyle & Leisure and Specialist Commercial.
If you own a farm building in an area that attracts tourists, you might have considered renting it out to holidaymakers. While this can be a profitable and fulfilling side business, there’s plenty to consider first. In this article, we explore what you need to think about when renting out your farm building to guests.
Plan what you’re going to offer
Before you start accepting your holidaymakers, it’s important to consider what you plan to offer to tourists, so you can stand out from the crowd and attract visitors to your farm. You could add shepherds’ huts or glamping pods to your farm, could convert your barn into a holiday let, or even add a hot tub (so long as you prepare adequately for the risks involved).
You could also offer craft workshops or sessions where guests can meet your animals (make sure you prepare adequately for the risks involved here too). You may also want to consider allowing pets, as properties that allow dogs generate 18% more revenue than those that don’t.
Balance your commitments
Of course, if you own a farm, it’s likely that your priorities lie with running it – operating a holiday let will come second to farming. Consider employing the assistance of a holiday let business to take some of the pressure off you and hire local businesses to assist with cleaning and maintaining your holiday let.
Check your mortgage
Contact your mortgage provider for permission to rent out all or part of your holiday let.
Some lenders assess affordability based on projected rental income rather than personal earnings and may impose different loan-to-value limits. Discuss your options with your lender to ensure you meet their terms and explore mortgage products designed for holiday lets.
Check planning permissions
It’s worth contacting the local planning authority where your farm building is located to confirm whether you need permission and understand any conditions that apply to holiday lets in your area.
Regulations around holiday rentals vary widely depending on location. Even within the UK, rules differ between England, Scotland, and Wales, covering everything from tax obligations to planning permissions.
If you’re planning on converting part of the property to become a short-term rental, including outbuildings, you will likely need planning permission, and a 'change of use' application could be required. If you’re planning on adding glamping pods or cabins to your farm, you’ll also need to apply for permission from your local council.
Be aware of recent tax changes
In April 2025, the Furnished Holiday Lettings (FHL) tax regime was abolished, meaning that holiday lets are taxed in the same way as other rental properties.
If you ran a qualifying furnished holiday let during the 2024–25 tax year, which ended on 5 April 2025, you can still claim the tax benefits when submitting your return for that period. This means you may be able to deduct the full cost of mortgage interest, claim capital allowances on furnishings, and benefit from capital gains tax relief if you sell the property. Additionally, income from your holiday let can still count as pensionable earnings for that tax year.
However, from the 2025–26 tax year onward, these specific tax breaks for furnished holiday lets will no longer apply, and all holiday rental income will be taxed as standard property income.
However, as holiday lets fall under business rates instead of council tax, this means you will likely not need to pay council tax on your farm building when renting it out. To qualify, the property needs to be available for at least 140 days a year and rented out for 70+ days.
Get the right insurance
Without the right protection, you could leave your holiday let exposed to unexpected risks. When the property is empty, issues like burst pipes, theft, or vandalism can arise. When guests are staying, accidents can happen – someone might get injured, or valuable furnishings could be damaged. You’ll also need the right cover if you’re planning on converting your farm building.
For the most part, standard home insurance isn’t suitable for holiday lets, so it’s important to get tailored cover in place. Look for policies that include public liability in case guests get injured, and protection for loss of rental income if the property becomes uninhabitable due to an insured event.
Brokers: Can our specialist teams support your clients?
At Geo, our expert teams can support with quality cover across a spectrum of specialisms, including agricultural insurance and holiday home insurance, with decades of experience in both areas.
Our colleagues at Renovation Underwriting (part of the Geo family) can also support clients who are looking to renovate their farm buildings. You can learn more about how to manage building works on farms by watching the recent webinar from Renovation Underwriting below.
Find out more about how you can better support your site operator and landowner clients here.
Keeping it stable: What your clients need to know about renovating farm buildings
Get in touch
Get in touch with Geo today to find out more about our insurance offerings for site operators and landowners, or find out more by visiting the product pages on our website below.
- Visit our Agriculture product pages
- Visit our Caravan and Holiday Park Site Operators product page
Contact our sales team for a prompt response on sales@geounderwriting.com