Real estate

Short-term lets in England required to obtain planning permission 'from this summer'

Published on 4th Mar 2024

New restrictions on the use of short-term rental residential properties will aim to increase housing supply

Apartment building facade with balconies

Michael Gove, secretary of state for levelling up, housing and communities, has announced changes around planning rules for short-term lets in England. The government has confirmed that the reforms will be introduced "from this summer" and will require permission from the local authority where a property is to be let on a short-term basis or as a holiday home for more than 90 nights a year.

The announcement follows the outcome of a consultation on short-term lets last year and the government said that the "changes are part of a long-term plan to prevent a 'hollowing out' of communities, address anti-social behaviour and ensure local people can continue to live in the place they call home". It is also part of the government's specific housebuilding strategy, designed to assist in meeting Rishi Sunak's manifesto commitment of delivering one million new homes in England.

The main changes for short-term lets include the introduction of a new planning "use class", a national register and associated permitted development rights.

Planning permission

A new use class C5 will be created for future short-term lets that are not used as a sole or main home. Existing short-term lets will be automatically reclassified into the new category and will not require a planning application.

National register

A mandatory national register will be set up, to provide local authorities with information on short-term lets in the area and enable them to monitor their use, the impact on the local area and whether health and safety rules are being met.

Associated permitted development rights

The government also intends to introduce associated permitted development rights – allowing for a property to be changed from a short-term let (C5) to a standard residential dwelling (C3) and vice versa without the need for express planning permission.

However, local authorities would be able to remove these permitted development rights by making an "article 4 direction". Article 4 directions enable local planning authorities to withdraw specific permitted development rights across a defined area, thus, if applied to the new permitted development rights, requiring planning permissions for the change of use from C3 to C5 (and vice versa).

The '90-day rule'

The government proposals do not impact on existing short term lets  as the intention is they will be automatically re-classified (as stated above) the proposed changes will also not affect the "90-day rule", which allows homeowners who let out their own main or sole home for up to 90 nights a year without planning permission as such short-term lets  will not  be included in the new use class. Lettings for more than 90 days will require planning permission.

Hotels and serviced apartments

As the proposed changes are focussed on short-term lets, the changes will also not affect hotels, hostels or B&Bs. However, the serviced apartment sector may be impacted as the industry is largely made up of properties with either a C1 or C3 use class. Properties with the C1 use class (which is for hotels) should be unaffected, but the properties with the C3 use class (for residential) reclassified into the new C5 use class and will need to be compliant with any added regulations.

Intervention goal

There has been a noticeable increase in recent years in the number of properties being used as holiday rentals or short-term lets, which has reduced the number of properties available for local residents. This dramatic increase was exacerbated by the coronavirus pandemic with a large spike in "staycations".

The government's argument is that as short-term lets will become subject to the planning process, local authorities will have greater power to control them. The levelling-up secretary has stated that he believes these new measures will tackle the problem of local people being "denied to rent or buy in their own community" and  protect those residents from having to move out of their communities.

Mixed reception

Amanda Cupples, general manager for Northern Europe at Airbnb, regards the measures as "good news" and has commented that families who host on Airbnb will "benefit from clear rules that support their activity, and local authorities will get access to the information they need to assess and manage housing impacts and keep communities healthy, where necessary. We have long led calls for the introduction of a Host register and we look forward to working together to make it a success."

However, Generation Rent issued a statement that is less supportive of the proposed changes. It identified that over 35,000 homes have become holiday homes or short-term lets since 2019, which raised "significant doubt" as to whether the proposed changes would be enforceable, and suggested that not enough is being done to reverse recent trends around short-lets.

The fact that the proposals will allow existing short-term lets to be automatically reclassified and have permission to continue, was described as "shutting the stable door once the horse has bolted". Generation Rent has urged the government to go further than the proposed changes and give local authorities the powers they need.

Osborne Clarke comment

The introduction of the permitted development rights from C3 to C5 and vice versa will arguably liberalise the process in the absence of an article 4 direction that removes these rights. The National Planning Policy Framework states that article 4 directions should only be used in limited circumstances and, in all cases, "apply to the smallest geographical area possible". It will fall to local authorities to establish the perceived issue with short-terms lets in their area in order to justify the removal of the new permitted development rights.

Moreover, the fact that existing short-term lets will not be required to obtain planning permission for the new C5 use class may lead to an increase in short-term lets in some areas, with an associated reduction in what otherwise would have been standard C3 residential dwellings. An increase can be expected in the number of operators of existing short-terms applying for "certificates of lawfulness" establishing the use following the introduction of the new rules.

While the changes may be perceived to go some way towards achieving the government's aim, it is clear that further detail is required to determine the true impact on communities and extent of additional measures that may be needed.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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