AUCTION experts are reporting a rise in buy to let UK holiday homes being bought under the hammer as investors take advantage of tax reliefs.

Last year Alistair Darling said he would cut tax reliefs on furnished holiday lets. However, the perk was saved in this month's Budget. Capital Gains Tax (CGT) stays at the rate of ten per cent and gains can be rolled and absorbed if investors go on to buy a more expensive property.

With the number of Brits shunning foreign trips to holiday in the UK, holiday homes are in demand. Overseas trips fell nine per cent during the first three months of this year with almost one million fewer journeys than in the same period last year.*

Chris Baguley, director of specialist lender Auction Finance Limited, said:

"All the signs were that there would be a cut in the range of tax reliefs on furnished holiday lets but the perk has been saved. It was widely thought that CGT would go up, but it stays at ten per cent. We're seeing more and more people in the auction room keen to pick up a bargain home to let out. Many are buying homes that need repairs, fitting new appliances, and claiming tax relief.

"If properties are bought in the right places at the right price, excellent yields can be achieved. Savings accounts are still giving poor returns, so many savers see these homes as a safe haven for their cash."

CGT must be paid when something is sold for more than was paid for it. Shares, land and buildings will usually attract a CGT liability.

There are also capital allowances available on holiday homes, starting at 40 per cent, on expenses to the property, such as buying a new bathroom.