Change of planning use for short term residential property lettings

Recently, the government issued a consultation into planning changes to use classes and permitted development rights to help give local communities greater control over the number of short-term lets in their area and support sustainable development. The consultation period ended on Wednesday 7 June.

Such a scheme will have huge and potentially lasting effects on the whole short-stay industry. There are many organisations and businesses within the short-stay industry that have broadly concluded that there should be a delay on the decision on the implementation of the new use class until the other consultations, such as the Registration Scheme, have been concluded and their impact is therefore better understood.

The Registration Scheme has been proposed in recognition of the growing issues and calls for further action relating to tourism accommodation as part of the Tourism Recovery Plan that came into effect in June 2021. The government has announced that based on responses to date, the majority of respondents have indicated support for the Registration Scheme which may in fact include a form of licensing schemes as well.

Regarding the proposed changes that will affect short-term lets, the government consultation paper sought views on how homeowners themselves might be provided with flexibility to let out their sole or main home for a number of nights in a calendar year.

There are a number of pertinent issues that the government included in the Consultation Paper which inevitably will have a bearing on the new legislation if enacted.

A few key issues that we’ve pulled from the government consultation document to be aware of include:

Demand for visitor accommodation

In some areas, delivering for local housing needs is challenged by high demand for visitor accommodation. Short term lets can play an important part in supporting the visitor economy, for example around tourist events. The recent Department for Culture Media and Sport (DCMS) call for evidence on a tourist registration scheme, set out the government’s ambition to ensure that we sustainably reap the benefits of short term and holiday lets, whilst also protecting the long-term interests of holidaymakers and local communities.

The rise in the number of short-term lets in certain areas has however prompted concerns. High concentrations of short-term lets in areas such as coastal towns, national parks and some cities is impacting adversely on the availability and affordability of homes to buy or to rent for local people.

In recent parliamentary debates, several MPs have warned of the ‘hollowing out’ of communities, with the viability of local shops, schools and other local services impacted by the lack of a permanent population and properties being left vacant over winter. The analysis of responses to the DCMS call for evidence noted that ‘many respondents felt that short-term lets had negatively impacted the social dynamics and economic trajectory of local communities, in part by limiting the available housing stock and pricing residents out of the communities.’

The government has already taken steps to help manage such uses. For example, from April 2023, they tightened requirements so that properties must be available to let for 140 days or more in the previous and current year and actually be let for 70 days or more in the previous 12 months to qualify for business rates.

HMRC has also set stringent conditions that properties must meet to qualify for the income tax regime covering Furnished Holiday Lets (which is more generous than that for long-term lets), including that properties must be available for commercial let for at least 210 days and actually let commercially for at least 105 days of the year.

Using the planning system to manage short term lets

There is a wider public interest in supporting sustainable communities and providing homes to rent or to buy. The Consultation therefore considers giving local communities greater ability to control the number of short-term lets in their area and support the retention of existing dwelling houses to buy or to rent. Where particular areas want to use these planning tools to effect change, they will be able to do so, where it is justified locally. In those other areas where there is no local issue, the planning changes should not adversely impact on existing flexibilities for use of a dwelling house.

Subject to the outcome of the consultation, the changes would be introduced through secondary legislation and would apply in England only.

Watch this space!