Short Lets May Require Planning Permission, Proposal States

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Everything You Need to Know About Potential Short-Term Lets Reform

If you are a buy-to-let investor considering short-term lets as part of your property investment strategy, you need to pay attention to the latest rules and regulations to ensure that you are compliant and do not risk any fines.

According to the new Government proposals, landlords who rent out short-term lets may need planning permission to do so.

What could this potentially mean for buy-to-let investment?

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Why Is the Government Seeking to Reform Short-Term Letting Requirements?

This week, ministers announced two consultations about regulating short-term rentals, like an Airbnb property investment, vacation homes, and part-time residences for contract workers. The leading cause for these proposals is the rapid growth of this industry, pushing properties out of the long-term rental market in popular tourist destinations.

Short-term rentals often make more money because they’re not as tightly controlled as long-term rentals. This also means they get taxed more favourably.

Because of this, many landlords, especially in popular tourist spots, are switching from long-term to short-term rentals to get these benefits.

As a result, roughly 50,000 homes have been lost from the long-term rental market.

This makes it hard for locals to find affordable places to live. Plus, there are worries about parties and other disruptive behaviour in short-term rental homes.

The first consultation will talk about how a new registration system in England would work. The second one will discuss changing planning laws to limit the number of short-term rentals in an area.

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How Does the Government Intend to Tackle the Short-Term Lets Issue?

Last December, the Government announced plans to establish a registration system for short-term lets in England, following support for the idea revealed in a 2022 call for evidence.

Analysis of the feedback showed there were around 257,000 short-term and holiday-letting listings in England at that time. Ministers stated that such a register would equip local authorities with data on rented premises in their areas, aiding them in managing the impact of short-term lets on the broader housing market where it poses a concern.

The register would exclude B&Bs and hotels, but it would affect landlords offering short-term lets for contract workers or individuals whose primary residence is elsewhere.

The Department for Culture, Media and Sport (DCMS) is overseeing a consultation considering three options:

An opt-in scheme for local authorities, with a national framework allowing councils to decide if short-term lets are problematic in their areas.
An opt-in scheme for local authorities with a nationally set framework and a review to determine whether to make the scheme mandatory.
A compulsory national scheme managed by the English Tourist Board and local authorities.

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Will There Be Any Changes to Planning Laws?

The Government is seeking input on a new planning category for short-term rentals and adjustments to permitted development rights. These rights determine what modifications or extensions landlords can make to their property without planning permission.

The proposed permitted development rights aim to offer flexibility in areas where short-term rentals are manageable. However, they also allow for the removal of this flexibility in areas where concerns arise.

If these rights are revoked, landlords would need planning permission to convert a property into a short-term rental. Current short-term rentals would remain unaffected by this change as long as they continue to operate as such.

Landlords familiar with Houses in Multiple Occupation (HMO) regulations will recognise these usage restrictions, as similar measures, known as “Article 4 directions,” are common in urban areas to curb HMO growth.

The Department for Levelling Up, Housing and Communities, overseeing the consultation, is also seeking opinions on appropriate planning application fees for newly built short-term rentals.

The Government’s proposed changes aim to assist local areas in managing the growth of short-term rentals and fostering sustainable communities.

What Are the Benefits of Long-Term & Short-Term Rentals

While the Government may focus on curbing the growth of the short-term rental market, there are still numerous benefits to long and short-term letting arrangements.

For instance, with long-term lets offer the following advantages:

Reliable Income: Long-term rentals provide a steady income stream as landlords collect regular payments from tenants. Tenants also typically cover expenses such as Council Tax and utility bills.
Tenant Investment: When tenants have long-term leases, they’re more likely to invest in the property by purchasing furniture and curtains and even redecorating with the landlord’s agreement, making it feel more like home.
Property Maintenance: Long-term tenants tend to take better care of the property, minimising damage and wear and tear. They may even take steps to protect the property, such as removing shoes indoors to preserve carpets. We have published a property investment guide to read that is very useful.
Cheaper Overheads: Long-term rentals often come unfurnished, saving landlords the expense of providing and maintaining furniture and amenities. Additionally, there are fewer costs associated with turnover, such as cleaning, advertising, and updating furnishings.
Stable Cash Flow: With longer-tenured tenants, landlords experience more consistent cash flow and reduced risk of income interruptions due to vacancy periods.

On the other hand, short-term rentals offer these advantages:

Significant Demand: There’s a growing demand for short-term rentals in the UK due to increasing staycations, which could lead to higher profits.
Potential Profits: Short-term rentals generally bring in more money, with potential yields up to 30% higher. Properties like beachside homes, cottages, or city apartments can fetch higher rents, especially during peak times like summer, festivals, and major sports events.
Easier Maintenance: Maintaining short-term rentals is easier since there’s more time for cleaning and spotting maintenance issues early.
Flexibility With Renting & Selling: As a landlord, you have more flexibility in choosing your tenants and their length of stay, especially in high-demand areas. With shorter bookings, reclaiming your property or selling it whenever you want is simpler.

Stay informed about the latest UK property market developments with our 2024 buy-to-let area guides:

Author

Dale Barham

Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.