An Update to Short-Term Lets Guidance

Recognised as being vital to the infrastructure of the UK’s visitor economy, short-term lets include holiday cottages, homestays, and self-catering apartments, which are typically rented out to people visiting local areas for a few days at a time.

There has been a great increase in the availability of these short-term lets during recent years, with the rise of the popular short-term rental property platforms and numbers of people looking to take staycations.

Recognising the impact of changes within the guest accommodation sector, the UK government has announced a review of evidence and consultation on the Tourism Accommodation Registration Scheme. Before reflecting on the government proposals, let’s take a brief look at the definition of a short-term let.

What is a short-term let?

The government has defined a short-term rental property as follows:

(a) a dwelling, or part of a dwelling, which is provided by a person (“the host”) to another person (“the guest”)
(i) for use by the guest as accommodation other than the guest’s only or principal residence,
(ii) in return for payment (whether or not by the guest), and
(iii) in the course of a trade or business carried on by the host,

(b) any dwelling or premises, or part of a dwelling or premises, not falling within paragraph (a) which is specified for the purposes of this paragraph.

The short-term lettings market

A report released by Propertymark in October 2022 revealed that the availability of short-term lets had reached a peak during the pandemic when large numbers of people were looking to take short breaks in the UK. While there was a subsequent dip, the availability of short-term rentals has recently begun to pick up once more.

The majority of property agents operating in tourist hotspots said that they’d seen an increase in the number of short-term lets over the past 4 years. 16% of the British public were reported as having let out all or part of their home, with a further 12% having used STLs to fill a gap between longer-term rentals.

The short-term letting trends are known to have played out across the world, with international governments having adopted a variety of responses. While some have introduced very light-touch digital registration schemes, others have set strict limits on the duration of rentals and the number of short-term rental properties available in any single location. It’s recognised as an issue for local communities, with the number of affordable properties being limited as a result of short-term letting.

There’s a clear balance to be struck, given short-term letting benefits such as additional income for homeowners, more choice and flexibility for visitors, increased visitor spending in local areas, and the ability to absorb and disperse demand into a wider area.

Policy background

Recognising the issues associated with short-term letting and stakeholders’ demands for action, DCMS committed to consultation on a Tourism Accommodation Registration Scheme in England in the Tourism Recovery Plan in June 2021. The lack of available data, including on the quantity and location of short-term lets, prompted former Tourism Minister Nigel Huddleston MP to make a call for short-term letting research as a first step.

Six steps were proposed once the short-term letting evidence had been gathered:

• To do nothing
• To provide more information to the sector
• To develop a self-certification registration scheme
• To develop a registration scheme with light-touch checks
• To develop a licencing scheme with physical checks of short-term lets
• To address any issues through a regulatory alternative to a registration system.

Out of the 4,000 responses, the majority were in favour of a light-touch registration scheme. 60% of the respondents said that they’d support further intervention, with 42% supporting a registration scheme (18% of all respondents favoured a more interventionist approach, for example, a licensing scheme). Most respondents favouring a registration scheme called for it to be light touch and low cost.

An analysis of the responses to the DCMS’s call for evidence also revealed that there were approximately 257,000 short-term and holiday-letting listings in England in 2022, concentrated in the South West, London, and South East (28%, 17%, and 17% respectively, or 62% in total).

In addition to this, they found that, on average, hosts listed 1-2 short-term lettings and earned £5,000-£6,000 a year, and The average booking length was 3-4 days, with each short-term let thought to be let out 25-30 days each year by 2-3 guests. Based on these averages, DCMS estimates this at between 1.6 million and 2.6 million stays and between 3.2 million and 7.7 million visitors.

The government responded by setting plans for the introduction of legislation forcing property owners to get planning permission for the arrangement of short-term lets. A commitment was also made to the introduction of a registration scheme in England through the Levelling Up and Regeneration Bill (LURB). The suggestion is that this will prevent landlords from Airbnb registration and advertising.

Reflecting on the benefits

Speaking about the plans, Levelling Up Secretary Michael Gove said, “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.”

Having listened to representations from MPs in tourist hotspots, Mr Gove revealed his pleasure at launching the consultation to introduce a requirement for short-term letting permissions.

The proposed registration scheme has been associated with a range of benefits, including the continued development of a responsible, high-quality and competitive short-term lets sector. It is also expected to make a positive difference in terms of the diversity and sustainability of the visitor accommodation offer, with more support for the visitor economy. There may also be increased protection for local communities, particularly with respect to the amount of housing available to rent or buy.

The registration of short-term lets would ensure the availability of data for local authorities on the short-term lettings market. This would help in the management of properties for the local community, with the potential for the application and enforcement of use class changes. The consultation will also look at the option of allowing landlords to rent their properties for a set number of nights per year without any need for planning permission.

Culture Secretary, Lucy Frazer, said, “This new world of ultra-flexible short-term lets 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.”

She added: “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.”

Considering short-term letting use class

Besides the introduction of a registration scheme, the Department of Levelling Up, Housing, and Communities (DLUHC) is also planning a consultation on the introduction of a use class for short-term lettings. This consultation would address proposed planning changes to use classes and permitted development rights for the improved local management of short-term rental apartments and other properties.

The newly permitted development rights would allow for flexibility, depending on whether short-term rentals are considered an issue for the local communities. Planning permission would have to be obtained for the material change in the use of any short-term let. The DLUHC are also in consultation regarding the setting of the planning application fee, where permission is required for the development of a newbuild short-term let. Although separate, the DLUHC consultation will run at the same time as the DCMS consultation.

Scottish holiday rental updates

North of the border, the Scottish government has announced a delay to the introduction of its short-term lets licensing scheme by six months, from April 1 to October 1, 2023. When passed, this legislation will mean that Scottish landlords have to obtain licenses for the rental of their properties on a short-term basis.

The news has been welcomed by Orkney MSP Liam Macarthur, as a release on the pressure faced by short-term let hosts in the wake of the pandemic and cost-of-living crisis. This follows his warning about the disproportionate impact of the short-term lets scheme on remote communities and support of association calls for mandatory registration rather than a full licensing scheme.

Mr Macarthur said, “It is clear that this ill-thought-out scheme threatens to impose an additional financial burden on accommodation providers already struggling with a cost-of-living crisis. That could undermine the viability of many small businesses.”

“Having railroaded the legislation through parliament, I’m relieved that Scottish Ministers have at least now accepted the case for pausing the introduction to allow more time for the sector to prepare.”

“Even so, the scheme has already forced some local accommodation providers out of the sector. As welcome as the delay might be, therefore, it should be recognised that it comes too late to avoid damage being done to Orkney’s vital tourism sector.”

Digitise your short-term let inspections

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