Costs of a rental property that is empty between tenancies remain deductible as long as the property is genuinely held for letting and your property business is continuing. The business usually carries on through a void if you are trying to find a tenant or carrying out repairs, but it normally stops if you move in, decide not to relet, or sell your only let property, and costs after that point are mostly not allowable.

Does my property business stop when the tenant leaves?

Usually not. HMRC’s Property Income Manual says that a business letting a single property will not normally cease just because the tenant leaves and the property is empty while the landlord looks for a new tenant (PIM2510). If you are trying unsuccessfully to find tenants, HMRC will normally accept the business has not ceased, and the same applies while a property is temporarily unavailable because repairs or alterations are being carried out.

It also helps to remember that you have one property business per capacity, not one per property. If you own several lets personally, one of them being empty has no effect on whether the business continues; HMRC says in that case the cessation question should not even be considered (PIM2510).

Which costs can I deduct during the empty period?

The ordinary rule applies: the expense must be incurred wholly and exclusively for the property business and must not be capital (PIM2010). For a property held for letting but vacant, that typically includes:

  • Council tax. If a dwelling is empty, council tax is payable by the owner, and HMRC accepts a deduction where the landlord bears it (PIM2140).
  • Insurance. Premiums for buildings, contents and loss of rent cover are allowable for properties held for letting but vacant for the time being (PIM2110).
  • Advertising for new tenants and agents’ letting fees. Revenue advertising costs are allowable; permanent signage is capital (PIM2070).
  • Legal costs of a new short let. Costs of a let of a year or less are deductible. Where a replacement lease follows closely on the old one in broadly similar terms, a change of tenant does not normally make the costs disallowable (PIM2120).
  • Utilities, cleaning, gardening and service charges that you pay as landlord, which GOV.UK lists among allowable expenses for residential lets.
  • Repairs and redecoration to restore wear and tear between tenants. Improvements are capital (PIM2030).
  • Replacement furniture and appliances under the replacement of domestic items relief, but not the first purchase of an item (PIM3210).

Mortgage interest on a residential let is not deducted from profits by an individual landlord. It gives a basic rate tax reduction instead, and where property profits are too low to use it in full, for instance because of a long void, the unused amount is carried forward to later years (PIM2058). See landlord mortgage interest relief.

Can I use the empty period to refurbish?

Yes, and the business continues while the property is unavailable for repairs or alterations (PIM2510), but the work itself has to be split between repair and improvement. HMRC treats replacing parts with modern broadly equivalent materials as a repair, including replacing single glazing with double glazing, but treats extensive alterations amounting to reconstruction, or work that adds to the property, as capital (PIM2030). Where repairs and improvements are done together, the repair element can be deducted on a reasonable apportionment, and a contractor’s itemised invoice is the usual basis. The general principles are on our capital versus revenue expenditure page.

What if I or a relative use the property while it is empty?

This is where relief is most often lost. HMRC says the business should normally be treated as ceasing if, after letting stops, the property is put to another use such as the landlord living in it (PIM2510), unless you have other let properties keeping the business alive. Legal and agents’ costs of the next letting also become capital where the property has been put to substantial other use, such as occupation by the owner between lets (PIM2120).

A relative house sitting is treated more leniently. HMRC’s guidance is that where the property is genuinely available for commercial letting and the landlord is actively seeking tenants, costs remain deductible; as a guide, ordinary house sitting by a relative for, say, a month in a period of three years or more will not normally lead to loss of relief, but a relative using it as a holiday will (PIM2130). If a relative lives there at a reduced rent, expenses for that period are only deductible up to the rent received.

When does an empty period end the business?

Whether a business has ceased is a question of fact. HMRC’s rule of thumb is that the old business stops where there is a gap of more than three years and different properties are let before and after. HMRC says it will not normally suggest a cessation where the gap is less than three years and the landlord was trying to continue, but other facts can point to cessation sooner: its example is selling the only let property, putting the proceeds into a different venture for 18 months and then buying another property to let (PIM2510).

A business consisting of one let property also ends when you decide the property will not be relet, for example because you intend to sell it empty.

Why does a cessation make a difference?

  • Losses. Property business losses are carried forward only against profits of the same business. If the business ceases and a new one starts later, losses from the old business cannot be used (PIM4210).
  • Costs while waiting to sell. Once the business has ceased, running costs are not property business expenses. Some post cessation expenses can be set against post cessation receipts, and HMRC gives the example of background heating to prevent condensation and preserve the value of the property for sale. A separate post cessation property relief for a limited list of payments is available for up to seven years after cessation (PIM3000).
  • Restarting. Costs before a new business begins are relieved only under the pre commencement rules, which allow revenue expenses incurred in the seven years before letting starts if they would have been deductible after it (PIM2505). See pre trading expenses.

What does this look like in practice?

Illustration only. Dee owns one flat, let until 30 April. It is empty until 1 September while she redecorates and advertises. Her costs in the void are council tax £550, insurance £120, advertising and agent’s fee £400, redecoration £1,100 and a new oven to replace a broken one £450. She also adds a new en suite shower room for £6,000.

Cost Treatment
Council tax, insurance, advertising and agent’s fee Deductible: property held for letting
Redecoration Deductible repair
Replacement oven Deductible under replacement of domestic items relief
New en suite Capital improvement: not deductible against rent, but may count as enhancement expenditure for Capital Gains Tax on a later sale

If instead Dee had moved into the flat for those four months, the business would normally be treated as ceasing (PIM2510), the running costs would be private, and losses brought forward from earlier years would be lost if the later letting were treated as a new business.

What records should I keep?

Keep evidence that the property was available and marketed: agents’ instructions, adverts, viewing records and correspondence with contractors about the works. HMRC’s guidance repeatedly turns on whether the landlord was actively seeking tenants, and that evidence is what decides it if an enquiry is opened. Our allowable expenses for landlords guide covers the general rules.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.