The Consultation Into a New Use Class and Permitted Development Rights for Short Term Lets: What You Need to Know
The government is currently consulting on controlling short term lets in England by way of changes to the planning system. In this article we will explain how the new system might work and who would be affected.
What is being proposed?
Currently using a property for short term lets is mostly unregulated – save in selective licensing areas or in London where there is a 90 day limit. Any property owner can let out a house or flat on a short term basis, for holidays or other purposes, without a licence or official permission.
The government is considering changing this via the planning system. They are proposing to introduce a new planning use class (C5) for properties used for short term lets. This would mean that changing a property into a short term let or building a new short term let property would need planning permission.
Simultaneously there could be a new permitted development right to change a property into a short term let without planning permission. However local authorities would, at their discretion, be able to withdraw this right.
Although this proposal is technically an amendment to the planning system it is, in some ways, a kind of ‘back door licensing scheme’ for new short term lets.
Why are these measures considered necessary?
The number of properties being used for short term lets have increased considerably in recent years. Official estimates suggest that in September 2021 148,000 properties in England were being used for short term lettings via online platforms.
Reasons for this include the popularity of so-called ‘staycations’ in the UK. Also, short term accommodation sites such as Airbnb have made it easier for landlords to let a property short term for holidays and other purposes.
While short term lets can bring many benefits to an area, eg. in adding more holiday accommodation and supporting the tourist industry, they are also believed to have drawbacks too.
Short term lets have been blamed for creating a shortage of homes to buy or rent for local residents, and for pushing property prices and rents up. They have also been blamed for the so-called ‘hollowing out’ of local communities. For example, short term visitors do not usually use local schools, health services nor integrate into communities.
How might these new planning controls work?
Local councils would be able to decide whether or not they wish to control the creation of new short-term let properties in their area or parts of it. It is thought that areas where there is high demand for short term lets, and a shortage of affordable property for local residents may be most interested in adopting these measures. The consultation specifically mentions Cornwall for example.
Councils would be able to implement the new system by removing permitted development rights for the new short term lets use class by making an Article 4 direction. This may be similar to the way Article 4 is used to control the conversion of houses (planning use C3) into small HMOs.
Local councils would use the local democratic process to debate and introduce these controls. They would also be able to set down their policy on short-term lets in their local or neighbourhood plans.
Property owners in affected areas will then need to make a planning application for new short-term lets which will be determined in the usual way.
Will every short-term let property be affected?
Under the proposals properties which are already being used for short term lets will not have to apply for planning permission. They should automatically move to the new C5 use class however.
Property owners who want to set up new short-term lets will only have to apply for planning permission if the local authority in that area decides to make use of the new planning controls.
It is being proposed that homeowners wishing to let their own home could be exempted if the let period is under a certain (yet to be decided) period – either 30, 60, or 90 nights a year.
What will it cost?
Property owners who apply for planning permission to change the use class where permitted development rights have been removed, or build a new build short-term let, will pay the usual planning fee. This is currently £462.
The registration scheme for short term lets
In parallel with this consultation, the government is currently running a consultation on a registration scheme for short term lets in England. The registration scheme, which it is proposed to introduce in 2024, will allow local authorities to collect information about short-term lets in their area, and will aid enforcement.
You can find out more about this consultation here.
What could this new system mean for the property market?
There could be some possible implications in areas where local councils decide to require new short-term lets to obtain planning permission.
It may be difficult or even impossible to set up a new short term let. Where it is permitted, it will involve extra time, bureaucracy, and expense.
In affected areas, there could be a shortage of short-term lets including holiday accommodation as a result. This could push up rents. It could impact the economy in areas that depend on tourism.
It could push up the value of properties which acquire ‘grandfather rights’ to be short-term lets, so benefitting existing owners. This could even push up local property values.
Although it may stop the shortage of accommodation for local residents getting worse it will not necessarily improve things. Owners of short term lets are unlikely to want to give up their short-term letting rights, nor sell off what could be a valuable asset.
There could also be some problems with defining what is and what is not a short term let. Some types of lets like some student lets could be inadvertently affected by the new regime. Local authorities will also need resources to implement and enforce the new rules – most planning departments are already stretched.
How to take part in the consultation
Anyone can take part in the consultation which is being conducted by the Department for Levelling Up, Housing and Communities and which closes on 7 June 2023.
