In response to the major expansion of the residential short-term lets sector in recent years, the government is consulting on planning changes to better regulate the sector.
The government invites responses to the proposals via the consultation, which closes on 7 June 2023. Full details of the consultation can be found here.
How are short-term lets authorised currently?
Single household homes typically fall within class C3, as dwellinghouses. If a homeowner lets their dwellinghouse on a short-term basis, planning permission is required only where this change of use is material; the more significant the change of use and the greater the impact on neighbouring properties, the more likely it is to be considered material and therefore to require planning permission.
There is separate legislation for the Greater London area; properties for which residents are liable to pay council tax may not be let out as temporary sleeping accommodation for more than 90 nights in a calendar year. If this limit is exceeded, a material change of use has occurred, and planning permission is required.
What are the new proposals?
Introduction of a new use class: C5 (Short Term Lets)
Under the proposals, there will be a new short-term let use class, C5:
"Use of a dwellinghouse that is not a sole or main residence for temporary sleeping accommodation for the purpose of holiday, leisure, recreation, business or other travel".
At the date of the new use class coming into effect, properties meeting this definition will fall into the new use class without the need to apply for planning permission. The use may be confirmed by way of lawful development certificate where it is unclear.
Interestingly, there is no reference to short-term lets. This suggests that second homes may automatically fall within this use class. Also, the exclusion of sole or main residences means that the temporary letting of whole or part of the sole or main residence would not qualify the house as class C5.
Monitoring short term lets
The government proposes to introduce a register of short term lets which will provide local authorities with information about which properties are being let out in their area.
Introduction of two new national Permitted Development Rights (PDRs)
A PDR is the right to make a certain change without the need to apply for planning permission.
The government proposes to create two new PDRs:
- The right to make a material change of use from class C3 to C5; and
- The right to make a material change of use from class C5 to C3.
Local authorities will have the power to disapply these rights by way of an Article 4 direction. It is envisaged that a local authority may disapply the right to change from class C3 to class C5 in areas where short-term lets have had an adverse effect on the availability of homes for local people. As is currently the case, an Article 4 direction must be based on robust evidence and applied to the smallest geographical area possible.
Where there is no such Article 4 direction, there will be a need to notify the local planning authority of any change of use, but there will be no requirement to seek prior approval.
Increased flexibility for homeowners to let out their own home
To enable homeowners to let out their own home without planning permission, the government has proposed two potential mechanisms:
- Creating a new PDR which allows for the use of a C3 dwellinghouse as temporary sleeping accommodation for up to a defined number of nights per calendar year e.g., 30, 60 or 90 nights; or
- Incorporating a limit on the number of nights into the wording of the use class C3 itself.
Introduction of a planning application fee
Developers will need to be aware of two fees:
- Where new build short term lets are being developed, a planning application fee for each short term let equivalent to that for new dwellinghouses would apply.
- The standard fee for a planning application for change of use would apply whether or not the PDR has been removed through an Article 4 direction.
What does this mean for you?
The changes are significant for people or businesses who let their properties on a short-term basis (e.g. through Airbnb or serviced apartments), those involved in build to rent businesses with short-term letting aspects, and homeowners more widely. Such groups should be aware of the following:
Impact on house value – It seems likely that authorities in tourist hotspots struggling with the rise of Airbnb will choose to disapply this right. In areas where the right to change from C3 to C5 is disapplied, there may be an increase in C5 homes' value as the supply of authorised C5 homes stalls.
Planning restrictions – Homeowners and developers will face restrictions making material changes of use to their properties in areas where an Article 4 direction has disapplied a PDR.
Extra administration – Homeowners and developers may need to consider whether their property will fall within (or outside) the C5 definition at the date the legislation comes into play. In some cases this will be clear but in others the developer may need to apply for a certificate of lawful use. This may be important when selling the property.
Further opportunities – If there is no Article 4 direction in an area, C3 properties may be used within use class C5 without planning permission. This presents opportunities for additional income and future development.
The planning changes and register will not affect hotels, hostels or B&Bs.
What happens next?
Subject to the outcome of the consultation, changes would be brought forward as amendments to the current legislation.
Although there are many details to finalise before any such amendments are passed, it pays to be aware of potential changes on the horizon for your home and business. If you have any questions, please don't hesitate to contact a member of the Planning team.