Why most holiday let owners shouldn’t need to worry about this new law
In July 2018, new legislation designed to give holidaymakers more protection came into force. There was no fanfare or big announcement, the regulations just slipped into the system under the radar. This new law was written with the large hotel chains and holiday booking companies in mind, but some holiday let owners are worried that they will be subject to the ‘catch-all’ nature of the new law. Here, we explain why the majority of holiday let owners are worrying needlessly.
What are the Package Travel and Linked Travel Arrangements Regulations 2018?
Over the last few years, the number of holidays booked online has rocketed. To entice people to book with them, many companies offer package holidays. A package holiday is formed when at least two of the following three elements are linked to the holiday offer:
- Other tourist services, such as meals, a spa service, guided tours, etc.
Many companies (such as airlines) offer added elements when you book online. For example, when you book a flight, you may be offered discounted accommodation, car rental, and airport transfers. These add-ons are provided by third-party companies, but, because of the way they are sold, they don’t actually form a package.
This means that, should one of the third-party service providers offering the add-on go bust before a holidaymaker takes their holiday, the holidaymaker could be left with less than they expected and less than they paid for. Plus, the company through whom the holidaymaker booked is not liable – the holidaymaker would need to seek compensation through the third-party company.
So, if a holidaymaker booked a hotel through an airline’s website, and the hotel went out of business, the holidaymaker could be left out of pocket, with nowhere to stay and the extra expense of finding new holiday accommodation.
The difference that ‘linked travel arrangements’ make
The new law now includes ‘linked travel arrangements’. This is formed where a holidaymaker (or other guests):
- Books one element of a holiday…
- Then books another element within 24 hours…
- Where the element has been promoted by the provider of the first element…
- Whether or not the provider of the first element benefits financially from the arrangement.
Therefore, the discount voucher you agreed with that wonderful gastropub near to your holiday let (offering a ‘buy four meals pay for three’ deal) is now a linked travel arrangement. If the pub goes out of business, you could be liable for a claim for financial compensation.
To mitigate this risk, you (the holiday let owner) should have insurance against it. That’s not particularly fair. You’ve agreed on a discount for the benefit of your guests, with no financial compensation to yourself, and yet you could be financially liable, and you’ll need to pay insurance premiums to cover this risk!
Fortunately, there is a but…
Signposting is different from linking
You’re likely to be selling most of your available weeks online. The new regulations apply to these, but only if the holidaymaker then books a further element online, through you, within 24 hours.
This means that if you simply ‘signpost’ other attractions or services by recommending them, the new regulations don’t apply to you. If your welcome package includes vouchers for local eateries, these ‘offers’ are not captured by the new regulations.
It is only if you offer an add-on as part of the overall experience, acting as a partner with the third-party provider, that you would need to purchase specific insolvency insurance.
Therefore, for the vast majority of holiday let owners, the Package Travel and Linked Travel Arrangements Regulations 2018 will make no difference. It’s actually a piece of sensible legislation (I know, that’s an oxymoron), that will do what it is designed to do, without harming the small holiday let investor: ensure that big companies are accountable for the failures of associated third-party companies and stop them claiming ‘nothing to do with me’ if the third-party provider fails.
For more information, visit https://www.gov.uk/government/publications/package-holidays-complying-with-regulations-guidance-for-businesses.
To learn more about the advantages and benefits of holiday let property investment, contact Gladfish today. We’ll be happy to discuss how a holiday let investment might fit in with an existing portfolio or be the investment to help you achieve your lifestyle goals.
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