11 July 2023

Government action on short-term holiday lets – what could this mean?

The Government has responded to mounting pressure to address the adverse impact of short-term rentals.

Over the years the significant increase in short-term lets and second homes have seen local authorities complaining about anti-social behaviour from “party” lets, local residents in holiday hot spots being priced out of the local housing market and hotel operators struggling in an already difficult market. The counter argument is that short-term rentals play an important role in the country’s tourism economy.

Last year the Government issued a call for evidence on how the sector could be further regulated. Out of the 4,000 responses, 60% indicated support for further regulation and control and 42% wanted a light touch, low-cost licencing scheme.

In response the Government is introducing, through the Levelling Up and Regeneration Bill, a statutory licensing scheme for all visitor accommodation providers. The scheme will be brought forward through regulations which can set out any conditions that must be satisfied for a short-term rental property to be registered and the circumstances in which the registration can be revoked. As with much of the Government’s current legislation agenda, the devil will be in the detail of the regulations.

Alongside the registration scheme, the Government has consulted on the introduction of a new use class C5 for short term lets. There will be permitted development rights to change from standard residential C3 use class to the new C5 use class. However local planning authorities will be able to apply for Article 4 Directions to remove those permitted development rights, thereby giving them control over the number of new short-term lets in their administrative area. The Secretary of State can direct a local planning authority to cancel or modify an Article 4 Direction and, anticipating a large number of applications for the Directions will be made, it will be interesting to see how many are made and where, and whether the Secretary of State intervenes.

It remains to be seen how effective the registration scheme and the introduction of the new C5 use class will be in reducing the adverse impact of short-term rentals. In practice, it is unlikely to significantly reduce the current number of short-term rentals meaning the adverse impacts may continue to be suffered. There is also the concern that already stretched local authorities will not have the resources to properly enforce the registration scheme or unlawful changes of use to short-term lets.

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