The growth in short-term lettings in England

The number of short-term lettings in England has increased significantly in recent years, due to the development and growth of the ‘sharing economy’ and ‘peer-to-peer’ accommodation services such as Airbnb.

These online platforms essentially provide marketplaces which connect people who want to rent out their properties or spare rooms with people seeking short-term accommodation.

Restrictions on short-term lettings

Outside London, there is no specific limit on the number of days a property can be let out on a short-term basis. It is up to the local planning authority (LPA) to make a judgement as to whether a letting amounts to a material change of use, for which planning permission must be sought.

Different rules apply to London homeowners. Those who wish to use residential premises for short-term accommodation for more than 90 nights in a calendar year must seek planning permission from their LPA.

Alongside planning rules, in some cases tenancy, lease and mortgage agreements may prohibit or restrict short-term lettings.

Concerns around the growth in short-term lettings

Proponents highlight the benefits of the accommodation sharing economy for consumers, providers and the economy in general. However, concerns have been raised about the negative impacts associated with the growth in short-term lettings and their concentration in certain areas.

Key concerns include:

• commercial operators using residential properties as letting businesses in breach of planning rules and the challenges local authorities face in taking planning enforcement action.

• the impact on local housing markets, in particular on supply and rental prices.

• negative effects on neighbours and local communities, for example from noise disturbance and anti-social behaviour.

• taxation compliance and compliance with health and safety regulations.

• the implications for traditional short-term accommodation businesses such as hotels and bed and breakfast accommodation.

Measures to strengthen the regulation of short-term lettings in England

In light of these concerns, there have been calls from a range of organisations, commentators and politicians for greater regulation of short-term lettings.

On 19 February 2024, the Secretary of State for Levelling Up, Housing and Communities, Michael Gove, announced new regulatory measures intended to “strike the right balance between protecting the visitor economy and ensuring local people get the homes they need.” The Government will introduce:

• a national registration scheme for short-term lettings. The register is intended to provide information to help local authorities understand the extent and impact of short-term lettings on their communities and underpin compliance with health and safety regulations.

• new planning rules to give local authorities greater control over the number of short-term lettings in their area. The Government will introduce a new planning ‘use class’ for short-term lettings to distinguish them from standard residential dwellings. Changes between the uses will generally be ‘permitted development’, but will require planning permission where local authorities revoke these permitted development rights.

Further details of these measures, including the timeline for implementation, will be set out when the Government formally responds to its earlier policy consultations on these proposals. Reforms are expected to be introduced from summer 2024.

There is broad support from across the sector for a registration scheme for short-term lettings in England. In general, the planning reforms are supported, although some organisations, such as the Local Government Association and Generation Rent, are concerned that they do not go far enough. Some others, such as the UK Short Term Accommodation Association and Tourism Alliance, have expressed concern that the planning reforms could adversely affect the tourism economy.

From 6 April 2025, the Government will also remove the tax advantage for landlords who let short-term furnished holiday properties over those who let residential properties to longer-term tenants.

Regulation of short-term lettings in Scotland, Wales and Northern Ireland Scotland

From 1 October 2022, licensing is mandatory for all short-term let accommodation across Scotland. New hosts must apply to the local authority before accepting bookings or receiving guests. Existing hosts had until 1 October 2023 to apply for a licence.

The Scottish Government has given local authorities the power to designate ‘short-term let control areas’, in order to manage high concentrations of short-term lettings. It is also reviewing the tax treatment of short-term lettings.

Wales

In September 2022, the Welsh Government introduced legislation to implement a new planning use class for short-term lettings, and give local planning authorities greater control over the number short-term lettings in their areas.

Following a public consultation, the Welsh Government confirmed it would establish a statutory licensing scheme for visitor accommodation in Wales. Legislation is expected to be introduced to the Senedd Cymru/Welsh Parliament before the end 2024.

The Welsh Government has also committed to work with local authorities to develop a national framework so they can request increased land transaction tax rates for second homes and holiday lettings be applied in their local area.

Northern Ireland

All tourist accommodation in Northern Ireland must be certified by Tourism NI, a non-departmental public body of the Department for the Economy.

Regulation of short-term lettings outside the UK

Outside the UK, many countries have introduced measures to regulate short-term lettings. Regulatory approaches vary according to contextual factors, such as the housing market, tourism economy and local land use law.

The European Union has legislated to implement a framework for data collection and sharing relating to short-term accommodation rental services across the EU.