Second homeowners may need to get planning permission to rent their properties out as holiday lets under Government plans to protect tourist hotspots.
In a bid to help local people struggling to buy or rent a home, new rules on renting out second homes on a short term let basis are being consulted on by the Government.
With the aim of giving communities more control over short term lets, the proposals will create a new planning use class, giving local authorities the power to make owners wanting to let their houses apply for planning consent.
The Government is also consulting on plans to introduce a registration scheme for short term lets. The proposals were unveiled on April 12th, 2023.
Let’s take a closer look at what this may mean for second homeowners.
The consultation, published by the Department for Levelling Up, Housing and Communities, proposes introducing the requirement for planning permission for an existing home to be used as a holiday let. It will also consider whether to give owners the flexibility to let out their homes for a set number of nights a year without obtaining planning permission.
Separately, the register of short term lets is being introduced through the Levelling Up and Regeneration Bill currently going through Parliament. Subject to the outcome of the consultation, the planning changes will be introduced in England through secondary legislation later in the year.
Background to the consultation
As the UK’s housing crisis deepens, holiday homes have increasingly come under the spotlight for many reasons. The pandemic staycation boom led to a surge of people buying second homes in holiday hotspots and house prices soared; as a result, many local people and those on low incomes were priced out of the market for either buying or renting a home. The stratospheric boom in Airbnb lettings that followed is blamed by many for being the start of where things went wrong.
The Levelling Up, Housing and Communities secretary, Michael Gove, is considering new laws to restrict short term rentals – which are often Airbnb holiday lets – in beauty spots by introducing changes to the planning rules to deal with the problem in the Levelling up and Regeneration Bill. Rising numbers of Airbnb properties have eaten into the long term private rental sector, resulting in a shortage of homes for workers in some parts of the country, affecting the labour market. The Bill will introduce changes to restrict how homes can be turned into Airbnb’s.
While the Government acknowledges that short term lets are important to the UK visitor economy, it wants to protect local communities and make affordable homes available to rent or buy. The proposed changes would see a planning use category created for short term lets which are not used as a sole or main home. Local authorities can choose whether or not to use the new planning controls.
It’s also looking at `a degree of flexibility’, allowing second homeowners to let out their home for a maximum number of nights a year before having to seek planning consent to change the property’s primary use and reclassify it as a short term let. It’s consulting on whether this should be 30, 60 or 90 nights a year. The changes are set to come into force later this year following the consultation.
Registration scheme for short term rental property
The Department for Levelling Up, Housing and Communities has launched a consultation on plans to introduce a registration scheme for short term lets which is being undertaken by The Department for Digital, Culture, Media and Sport. Airbnb has supported the plan for a register but asked that a balance be found between protecting housing and supporting those who let a second home to help with costs.
The problem in tourist hotspots
The number of second homes in holiday areas has led to criticism of the huge number of properties being left empty for much of the year when local people can’t afford to buy or rent. Any new houses are snapped up as second homes, forcing young people to leave their community and seek work and housing elsewhere. Airbnb’s offering short term rentals have mushroomed in areas such as Cornwall, Whitby in North Yorkshire, areas of outstanding natural beauty like the Lake District and many parts of Devon, reducing the number of affordable houses available. Some villages become virtual ghost towns during the off-season, making it hard for local businesses to survive.
In St Ives in Cornwall, the sale of new build homes to second homeowners has been banned by the local authority since 2016. Across Cornwall, there’s pressure from locals and local politicians to clamp down on the number of second homes and holiday lets: residents in Fowey and Mevagissey have voted to limit the sale of new builds to permanent residents. In Whitby, residents voted to restrict the sale of new builds to permanent residents and councillors voted to double the council tax on second homes. With an average house price of £1.2m, Salcome is Britain’s most expensive seaside town according to Halifax; it has scores of empty homes out of season, making it hard for businesses to survive. Welsh councils can cap the number of second homes in each area and raise the maximum council tax premium on such properties to 300%: a licensing scheme for holiday lets is also planned.
The number of holiday lets in England has risen by 40% in three years, according to the BBC which analysed council figures last year. Increases were particularly notable in areas such as Devon, the Isle of Wight, Norfolk, The Cotswolds and Scarborough.
Protect `cherished’ areas
Mr. Gove commented:
Tourism brings many benefits to our economy, but in too many communities we have seen local people pushed out of cherished towns, cities and villages by huge numbers of short-term lets. I’m determined that we ensure that more people have access to local homes at affordable prices, and that we prioritise families desperate to rent or buy a home of their own close to where they work.
Culture secretary Lucy Frazer said:
This new world of ultra-flexible short term gives tourists more choice than ever before, but it should not come at the expense of local people being able to own their own home and stay local. The government wants to help areas get the balance right, and today we have an incomplete picture of the size and spread of our short-term lets market. This consultation on a national registration scheme will give us the data we need to assess the position and enable us to address the concerns communities face.
The importance of tourism in rural areas
Andy Fenner, chief executive of the Short Term Accommodation Association (STAA), representing the short term rental sector, said the proposals overlook its importance to the UK tourist economy and the businesses it supports.
He pointed out that the short term rental sector’s growth has helped create a new jobs economy: according to a report by Oxford Economics, commissioned by Sykes Holiday Cottages and the STAA, the short term rental sector contributed £27.7bn to the UK economy in 2021 alone. It also led to nearly half a million jobs, many in rural areas with low household incomes; typically, these include multi-property housekeepers, handymen, gardeners, and people who meet and greet holidaymakers. Mr Fenner added that the sector also provided £4.6bn in taxes to the UK Exchequer, and commented:
Many people simply underestimate or are unaware of the positive impact that the short term rentals sector has on the UK economy, especially in those areas of the country that are typically not best served by highly paid jobs. The Oxford Economics report highlights how important short term rentals are to many communities in rural Britain and illustrates just how many people benefit from their operation. The flexibility of hours the industry offers means that a whole wave of people who were previously unable to take up a full or even part-time job can now be employed to do important jobs that fit around their family or other commitments.
The UK is a leader in this industry, and we need to make sure that we enable it to grow responsibly to meet the increasing consumer demand for a ‘home-from-home’ holiday or business stay experience and continue to provide quality employment opportunities for local communities.
No ideal solution
Attempts to skew the property market always have consequences that are hard to foresee as the market is constantly changing. It’s also ingrained in the UK psyche to use property as an investment tool, and government intervention to limit that aspiration will meet with opposition, despite sympathy for the plight of locals in tourist spots.
Giving councils the power to protect their areas may seem one way of making communities more sustainable, enabling locals to buy and rent houses, and ensuring that there’s consistent demand for local services. While prioritising new builds for locals may be workable, giving them priority when it comes to buying established houses is problematic: locals often want to sell their homes to affluent outsiders for high prices, especially if they want to downsize; telling them that they must sell to locals for a lower price for the sake of the community could be tricky. Also, renting a house out on Airbnb pays more than renting it to a local family. Imposing a cap on the amount of Airbnbs in a community may be one answer, but communities risk biting the hand that feeds if they restrict tourist numbers too radically.
While communities can’t have it both ways, creating a better scenario that works from both points of view is extremely challenging.
If you’re looking for more information surrounding the rules for short term lets, check out Sykes’ Planning Permission for Holiday Lets: A Complete Guide.