The Government has made a narrow but important change to how some self-catering accommodation is classified for business rates in England. The Non-Domestic Rating (Definition of Domestic Property) (England) Order 2026 was made on 25 June 2026, laid before Parliament on 29 June, and comes into force on 24 July. The Secretary of State made the instrument under sections 66(9) and 143(1) and (2) of the Local Government Finance Act 1988, with Alison McGovern signing it as Minister of State at the Ministry of Housing, Communities and Local Government. In practical terms, the Order changes which holiday-let properties must prove a prior-year record of both marketing and actual letting before they can fall outside the definition of domestic property.
Section 66 of the Local Government Finance Act 1988 is the legal gateway between property treated as domestic and property that can appear on a non-domestic rating list. Government guidance on the 2022 England rules said a self-catering unit normally had to show three things: an intention to make the property available for at least 140 days in the coming year, commercial availability for at least 140 days in the previous year, and at least 70 days of actual letting in that same period. The 2022 explanatory memorandum said those tests were introduced to require a genuine history of marketing and letting activity before business rates treatment was available. (legislation.gov.uk)
The 2026 Order does not remove those tests altogether. Instead, it rewrites section 66(2B) so that the previous-year availability and actual-letting conditions sit in a new subsection, 2BZA, rather than applying across every case. That matters because the amended structure creates three routes. A property can still qualify through the standard route in subsection 2BZA, but two additional routes now sit alongside it for specified classes of hereditament.
The first new route is aimed at mixed-use occupation. New subsection 2BZB applies where a building or self-contained part is occupied together with land that is used for a different, non-domestic purpose and forms part of the same relevant hereditament. For operators, that means accommodation within a wider non-domestic site is no longer required by this Order to satisfy the usual previous-year 140-day availability test and 70-day actual-letting test. The assessment point shifts to whether the unit sits within a genuine mixed-use hereditament and whether the adjoining land is in non-domestic use for another purpose.
The second new route is aimed at larger groups of self-catering accommodation. New subsection 2BZC applies where the relevant hereditament comprises or includes five or more buildings or self-contained parts, each meeting the forward-looking conditions in section 66(2B)(a) and (b), and none used as anyone's sole or main residence. The Order also defines a 'relevant hereditament' in broader terms than a single uninterrupted site. It can mean one hereditament, but it can also include hereditaments separated only by a highway where they would otherwise form one hereditament. In policy terms, a road running through a site will not necessarily prevent units from being treated as part of the same operation.
For billing authorities and the Valuation Office Agency, the administrative question is likely to move away from simple day counts in these alternative categories and towards property structure, occupation and use. HMRC guidance already treats self-catering complexes with five or more properties as a distinct valuation type, and the 2022 explanatory memorandum makes clear that the VOA is the body responsible for deciding whether accommodation belongs in business rates or council tax. (gov.uk)
The change is also arriving after a period of visible adjustment in the rating list. In statistical commentary published by the Valuation Office Agency in June 2025, 25,440 deleted properties were attributed to self-catering holiday homes following the 2022 England Order. That does not measure the effect of this new instrument, but it shows that section 66 classification rules can move a material number of properties between tax regimes. (gov.uk)
The explanatory note to the 2026 instrument says no impact assessment has been produced because the Order amends an existing local tax regime. That leaves the immediate legal effect clear enough, but it means the scale of the affected group will have to be tracked through casework rather than through a published forecast. The narrow point is worth keeping in view. Standard single-unit holiday lets still need a prior-year record of commercial availability and actual letting under new subsection 2BZA. The relaxation is targeted: mixed-use hereditaments and larger clusters of self-catering units are the categories that now gain an alternative route into non-domestic rating treatment.