So how exactly do you go about investing in short-term lettings UK?
Importantly, there are a number of ways to invest in a short-term rental property that can make the endeavour more affordable and maximise its capital growth potential.
One such strategy is investing in off-plan property, which means purchasing a unit in a property while it’s still in construction.
While this might mean you have to wait slightly longer before making a return, investing off-plan will usually enable you to pay for the property in stages, making it much more financially manageable.
Additionally, based on current UK property price growth predictions, if you purchase a property now, it will likely have increased in value by the time it’s complete and ready for tenants, creating an excellent capital growth opportunity!
In any case, there are a number of things that new hosts or landlords should be aware of prior to investing in property for short-term lettings.
- Planning Permission
- Short-Term Rental Law UK
- Purchasing a Short-Term Rental Property
- Potential Return from Short-Term Lettings
For potential investors interested in short-term lettings UK, planning permission regarding letting out property for short periods is one of the most common queries.
In simple terms, you do need planning permission if you want to rent out your property for short lets that together amount to more than 90 days per year.
If you are not required to pay council tax on the property in question, then you will also need planning permission if you have any intention of renting it out.
Either way, ensure that you have obtained the required permissions from the council or relevant local authorities in your area before advertising the property for short lets, as regulations can vary from place to place.
Short-Term Rental Law UK
Following the swift rise and recent transition within the short-term rental market, Governments across the world have had to adapt regulations to keep up with these fast-moving developments.
Due to the speed of this shift in the rental accommodation sector, there have been concerns that regulations that hotel and B&B owners must abide by have not yet reached properties listed on platforms like Airbnb. Therefore, governments have been developing new ways to better regulate and control areas of the market.
This has sparked some recent changes to UK law, leading to a number of new rules for short-term rentals that prospective landlords and investors should be aware of. These are:
- The Deregulation Act
The Short-Term Licensing Scheme
The Registration Scheme for Short-Term Lets
Read more about these rules in our next section.
One such example of a recent legislative change brought in by the UK Gov is the Deregulation Act of 2015.
Before this particular act became law, homeowners in London were not allowed to rent out their properties for less than a period of three months without planning permission.
Now, however, properties can be legally rented out for up to 90 days without the need to go through the process of applying for and obtaining planning permission.
Short-Term Licensing Scheme
In another recent development, the Scottish Government introduced the short-term let licence which is now a requirement for all owners of short-term rental properties.
As the industry continues to expand, short-term lets licensing is likely to become more common. Therefore, it’s important to keep up to date with the latest announcements from the relevant licensing authorities whether you’re a prospective or existing host.
For example, since the 1st of October 2022, landlords of all such properties in Scotland have been required to have one of the following four types of licences:
- Home Sharing
- Home Letting
- Secondary Letting
- Home Letting and Home Sharing
Registration Scheme for Short-Term Lets
In a similar attempt to monitor short-term lettings in England, the government has committed to introducing a registration scheme through the Levelling Up and Regeneration Bill (tabled in December 2022).
Citing the need to develop a ‘responsible, high-quality and competitive short-term lets sector’, the thinking is that registering short-term lets would provide data enabling local authorities to have access to relevant information on properties being rented out in the locality.
This also stems from a concern about the potentially damaging effects of the increase in short-term lets on local housing markets where a ‘hollowing out’ of communities and thus a rise in anti-social behaviour have been highlighted as possible problems.