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- May 31, 2023
Short-term lets in England, Scotland, and Wales are set to undergo new and proposed regulations in the coming months. Here is a breakdown of what landlords and tenants can expect from the changes.
The regulations are designed to provide greater transparency and safety for guests staying in short-term let accommodations. They include requirements for hosts to register their properties with local authorities and adhere to certain safety and hygiene standards.
The proposed legislation could give councils the power to place a cap on the number of days that a property can be let out on a short-term basis. This would aim to combat the issue of properties being used solely for short-term lets, thereby reducing the availability of affordable long-term rental options.
While these changes are not yet in force, landlords and tenants should be aware of the proposals and consider the potential impact on their short-term let arrangements. Staying informed and seeking legal advice where necessary can help ensure compliance with the new regulations and protect the interests of all parties involved.
The shortage of housing supply in England, Scotland, and Wales has prompted the government to introduce policies to regulate short-term and holiday lets. This marks a change in direction for the government, which had previously given favorable treatment to short-term lets due to their economic benefits for the tourism industry and homeowners who earn extra income from spare rooms and second homes.
However, the increase in landlords joining the short-term let sector has had a negative impact on the long-term rental market, according to Ben Beadle, the Chief Executive of the National Residential Landlords Association. He argues that the government’s own policies have contributed to a shortage of rented housing supply, despite record-high demand.
A recent survey by Propertymark also indicates that 69% of agents believe that the rise of short-term lets will have a negative impact on the private rented sector.
To address these concerns, the government has proposed measures to make accessing the benefits of renting on a short-term basis more stringent. From April 2023, second homeowners in England and Wales must prove that they have let their properties for a minimum of 70 days in a year to benefit from business rate relief instead of paying council tax.
Additionally, the property must be “available” to let for a minimum of 140 days, and hosts must meet this threshold in the 2022-2023 tax year to continue benefiting from business rate relief.
Richard Bond, Founder of Finest Retreats, warns that this retrospective evaluation could catch some holiday let owners off guard and have significant financial impacts if they are suddenly switched from business rates to council tax charges.
In October 2022, Scotland launched a new licensing scheme for short-term lets, which includes listings on Airbnb. This scheme requires local authorities to have a licensing system in place. New hosts are required to have a license before they can welcome guests. However, existing hosts who were already operating before October 1, 2022, have been given an extension until October 1, 2023, to apply for a license for each property they manage as a short let. This extension allows hosts six more months to prepare for the changes and help “spread the cost of the license fee” due to the ongoing cost of living crisis.
The Welsh administration has launched a discussion to introduce a mandatory licensing plan for guest accommodation providers across Wales. The licensing scheme intends to create an all-encompassing database to keep track of the number of guest accommodation businesses operating in Wales. This initiative is anticipated to aid the government in gaining a better understanding of the scope and characteristics of this industry, comparable to the purposes of the proposed registry in England. The consultation is presently underway and will continue to accept submissions until March 17, 2023.
The proposed tourist accommodation registration scheme in England aims to provide a more defined understanding of the size of the sector, its impact on the long-term stock levels, and the effects of new policies, as outlined in the Developing a Tourist Accommodation Registration Scheme in England consultation document.
There are various estimates from different sources regarding the growth of holiday lets across the UK. The CRPE reported a 1,000% increase in holiday lets across the UK between 2015-2021, while the BBC reported a 40% increase in holiday lets between 2018 and 2021.
The lack of adequate data about the size and nature of the sector makes enforcement challenging. The registration scheme consultation document also highlights the “unlevel playing field” in the application and enforcement of current regulations, particularly concerning key health and safety legislation.
Recent data indicates that the number of mortgage options for holiday-let properties has increased twofold from October 2022 to January 2023. Despite the forthcoming regulatory changes, there was a 14% increase in new holiday-let property owners in 2022 as reported by Sykes Holiday Cottages. It remains to be seen whether the new regulations will impact the popularity of the short-term let sector in the upcoming year.
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