There have been recent grumblings from the government to introduce a use class for short-term lets. This legislation will cover England only, and if it’s put into place, then it means that rent-to-rent and rent-to-serviced accommodation units will have to go through the planning process for approval.
This new change also includes the potential introduction of permitted development rights for the change of use from a dwellinghouse to a short-term let and the potential for change of use rights from a short-term let to a dwelling house. It is likely that this will only apply to properties that are rented out as a short-term let above a certain number of nights in a calendar year.
Although nothing is set in stone at the moment, it is important to know what conversations are being had so that you can prepare your business in advance. There are pros and cons to this change coming into play, and we’ll cover these later in the article.
Why Is This Happening?
It is becoming a matter of concern that the rise of short-term accommodation in certain areas may be having an adverse effect on the availability and affordability of housing for the local population.
The legislation will likely be flexible in less-popular areas where short-term lets are uncommon. At a guess, it will be these areas where permitted development rights are introduced, so full planning permission isn’t required. The government are also discussing what the application fee will be where planning permission is required for new build short-term lets.
When Will This Happen?
Right now, it’s all just speculation. An open conversation on the introduction of a use class and permitted development rights for short-term lets will be happening between the 12th of April 2023 and the 7th of June 2023. You can view the discussion and submit your thoughts on the Gov.uk website here.
After this, a decision will be made, and it is expected that a date will then be given for this use class to be put in place if the government decide to go ahead.
Is it a Bad Thing?
For rent-to-rent and rent-to-SA providers, the new use class will make life more difficult. In short, it’s another hoop that you must jump through, and it might make the idea less enticing to landlords/ letting agents.
On the bright side, it will reduce competition, as the people looking for a ‘get-rich-quick’ scheme will likely be put off by the process. It will hopefully raise standards in the industry and keep more people accountable. If you’re an established business that has been doing this for a while, then you’ll probably have fewer issues going through the process than someone with no experience.
It is both good and bad depending on how you want to look at it. In our opinion, you should expect these changes to take place and prepare your property business for them. Then, even if the government scraps the idea, you haven’t lost anything. But if they do go ahead, you’re ready, and your business won’t come to a grinding halt.
This isn’t certain, but it’s highly likely that the change will only apply to new short-term lets. So, if you already have a portfolio full of them, then your existing investments shouldn’t be affected.
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