Residential lettings should be given the same treatment by a taxation system that does not currently recognise them as equal businesses, according to the Residential Landlords Association

In a House of Lords debate, peers were told that holiday lets attract more generous tax rules because they offer extra equipment and services in order to compete with hotels and guesthouses - and there were "no plans to change the tax or other arrangements for tenancies in the private rented sector."

According to Baroness Gardner of Parkes, this was a "disappointing reply".

She told Lord Sassoon, the Commercial Secretary to the Treasury: "if you have holiday lettings, you can roll over capital gains and therefore there is every encouragement to extend your business, whereas if you are a private residential landlord, you do not have that option.

"Furnished holiday accommodation can only be let for a maximum of 31 days. Surely there is a desperate need for long-term residential accommodation in this country."

Alan Ward, chairman of the Residential Landlords Association, said: "We have long argued that, with 40% of property in the private rented sector built before 1919, these properties cannot afford to be allowed to decline.

"Better tax allowances for improvements, and improved energy efficiency are essential - but roll-over tax relief on the sale of one property, for investment in another, would help to provide more economical, affordable homes to rent."