Landlords and homeowners who rent out properties as short term lets may require planning permission to do so under new Government proposals.

Ministers have this week announced two consultations into plans regarding the regulation of short term rentals, including properties let through platforms such as Airbnb, holiday cottages and apartments and part-time homes for contract workers. The move follows concerns about the exponential growth of the sector.

Short term lets can bring higher returns, as they are less tightly regulated than long term lets in the private rented sector – and are taxed more favourably.

As a result more and more landlords – particularly those in popular tourist hotspots – have stopped letting long term to take advantage of these benefits, with recent evidence suggesting 50,000 homes have been lost from the PRS as a result.

This means local people are struggling to find affordable homes to rent, with concerns also raised over anti-social behaviour in homes rented out as ‘party houses’ for a few days at a time.

The first consultation is concerned with how a proposed new registration scheme in England should be administered, the second is looking at potential changes to planning laws that could limit the numbers of short term lets in a given area.

What does the Government want to do?

The Government announced its intention to set up a registration scheme for short term lets in England in December last year, after a call for evidence in 2022 showed support for such a scheme.

Analysis of the responses showed there were approximately 257,000 short-term and holiday letting listings in England at that time, and Ministers said a register would provide local authorities with data about which premises are being let out in their area, which in turn would help them manage the impact of short term lets on the wider housing market in areas where it is an issue.

The register would not include B&Bs and hotel accommodation, but, as currently outlined, would affect landlords who provide short term lets for contract workers, or anyone else whose main residence is elsewhere.

The consultation, being run by the Department for Culture, Media and Sport (DCMS), is considering three options:

An opt-in scheme for local authorities, with a national framework which would allow councils to decide whether they consider short term lets to be an issue in their area.
An opt-in scheme for local authorities with the framework set nationally, and a review point to determine whether to expand the scheme to become mandatory.
A mandatory national scheme, administered by the English Tourist Board, local authorities, or another responsible authority.

Proposed changes to planning laws

Alongside this, the Government is also consulting on a new planning class for short term lets and changes to permitted development rights, that is, what a landlord is allowed to do to their property, in terms of modifying or extending it without the need for planning permission.

It says the new permitted development rights would provide ‘flexibility where short-term lets are not a local issue, and allow for this flexibility to be removed where there is a local concern’.

Where the rights have been removed, planning permission would be required to change the dwelling into a short-term let. Existing short term lets would not need planning permission provided the property is continuously used as a short term let.

HMO landlords will be familiar with these sort of use restrictions as ‘article 4 directions’ like this are commonplace in cities to prevent the growth of houses in multiple occupation.

The Department for Levelling Up, Housing and Communities, which is running the consultation, is also asking for views on what level of planning application fee should be charged where permission is required for the development of a new build short-term let.

It says the proposed changes would help local areas to ‘manage the further proliferation of short-term lets and support sustainable communities’.

What does the NRLA think?

The NRLA has concerns over the rise of short term lets to the detriment of the PRS, but has urged caution when it comes to making changes to planning regulations.  

NRLA chief executive Ben Beadle said: “The NRLA has long been concerned about the loss of homes to the short-term holiday lets market, driven in large part by the more favourable tax regime. Whilst it is welcome that the Government recognises the importance of this issue, the introduction of a new planning use class may not be the right approach.

“Rather than applying planning restrictions to prevent the movement of rental homes into the short-term market, it would be more effective to help landlords continue to provide long-term homes by levelling the playing field in terms of their tax liability.

“Between 2017 and 2021 the Government restricted mortgage interest relief for private sector landlords to the basic rate of income tax. However, this did not apply to those renting out furnished holiday accommodation.  The NRLA is calling on the Government to reverse this decision, and for full mortgage interest relief to be available to landlords providing long term homes to rent.”

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