Yasmin Blamire, senior associate solicitor at Napthens, looks at the future of holiday letting in the UK, with plans by the new government to tighten regulations across England.
Recently, discussions around short-term lets have begun to intensify and the government is now advancing on plans to tighten regulations across England. This is driven by a significant rise in holiday rentals and concerns about the ‘hollowing out of communities’, making it difficult for local people to buy homes.
A short-term or holiday let is usually one that fails to meet the minimum duration required for the Assured Shorthold Tenancy of six months.
The government has proposed a registration scheme giving local councils ‘greater oversight and power to manage housing in their areas’. They are looking to grant councils the authority to require planning consent for landlords where necessary.
Landlords should anticipate increased policing by local councils and prepare for potential compliance checks such as health and safety regulations and fire safety standards to ensure their properties meet local standards. This may include the commencement of a licensing scheme to regulate holiday lets more effectively.
Currently short-term lets come under planning classification C3, which makes no distinction between whether the property is used as a main residence or is rented out on a short-term basis. The government has put forwards plans for the introduction of a new planning classification, C5, for short-term lets not used as a sole or main home.
This would ensure that all short-term lets would be added to a list, allowing the council to regulate the number of short term lets in their local communities. This has not yet been introduced, but presently the wording would be similar to ‘use of a dwelling/house that is not a sole or main residence for temporary sleeping accommodation for the purpose of holiday, leisure, recreation, business or other travel’.
There is, however, the proposed 90-day rule, which will allow homeowners to let out their main or sole home for up to 90 nights throughout a year without planning permission, as it would not be a material change of use.
If the new planning classification is introduced, the government intends to allow property owners to move between classes C3 and C5 without the need to obtain planning permission.
Although this could be restricted by an Article 4 direction, if the local council believes there is a significant increase in the number of short-term lets. This may require planning permission to be obtained to convert your property.
The furnished holiday lettings tax regime will also be abolished from April 2025. This will remove the tax advantage landlords have for short-term lets over normal residential properties.
The landscape of holiday lettings is advancing and there are significant changes on the horizon and landlords of short-term holiday lets must continue to stay aware of the expected changes.
They should review their current practices and ensure they are complying with existing regulations ready to navigate the changes successfully to continue to thrive in the holiday rental market.
