The British seaside holiday traditionally involved visits to places such as Skegness, Broadstairs or Torquay. Families would decamp to a seafront boarding house and spend time on the beach with buckets and spades. Such towns became prosperous, with the archetype, Blackpool, attracting 17m visitors a year in the decade after the Second World War.
Fashions have changed. In the 21st century, many holiday abroad, while the demand from the middle classes has moved towards a self-catering-experience in a holiday cottage that may formerly have been occupied by a fishing family or farm employee, made available as the labour force of those industries shrank.
The problem
Properties have been purchased as second homes by those from other parts of the country and are often made available to other visitors as part of the local leisure economy. They are not typically available for local purchasers at prices they can afford.
In addition, it is claimed that the local private rental market has collapsed. Tim Farron, MP for the Westmorland and Lonsdale constituency, stated in a parliamentary debate that there were just 232 long-term rental properties available in the whole of Cumbria, compared with 8,384 short-term lets, of which 75% are Airbnbs.
Farron pointed to the damaging effects on the local economy, with 83% of hospitality and tourism businesses in Cumbria reporting that they have difficulty in recruiting staff, meaning that 63% operate below capacity as they are unable to meet demand.
The government has recognised the pressures. For example, the Levelling-up and Regeneration Act 2023 allows a discretionary council tax premium on second homes of up to 100%. Cornwall Council, for example, intends to levy the additional tax.
My guess is that the additional tax will have marginal effect in moving property away from short-term lets, though doubtless cash-strapped local authorities will find the additional income useful.
Proposals and potential remedies
In February, the government announced changes to the planning system designed to give local planning authorities more control over the number of short-term lets in their areas. The secretary of state Michael Gove says the intention is to “support local people in areas where high numbers of short-term lets are preventing them from finding housing they can afford to buy or to rent”. So, what exactly is being planned and will it work?
First, what is a short-term let? The government proposes that “a short-term rental property” will be a dwelling provided for payment by a “host” in the course of the host’s trade or business to a “guest” as accommodation other than the guest’s sole or main residence.
One suggestion is the creation of a mandatory national register. Presumably the register will include on it all properties that are dedicated for use as short-term lets. The government wants the register to be a source of information for local authorities, enabling them to understand their local market and connected community and housing market effects. The information on the register will assist local authorities and other enforcers in ensuring short-term let accommodation is safe and quality-assured.
However, the major tool for managing short-term lets in a local authority area looks likely to be the planning system.
The government is consulting on:
- the introduction of a new use class for short-term lets;
- a new permitted development right for the change of use from a dwellinghouse to a short-term let; and
- a new permitted development right for the change of use from a short-term let to a dwellinghouse.
It is expected that homeowners can continue to let out their own main or sole home for, say, up to 90 nights a year without falling into the new regime.
The government proposes all property currently used for short-term lets will automatically transfer to the new use class once introduced. Assuming the permitted development rights are introduced as suggested, and local authorities take no further action, then properties will be able to pass freely into and out of the short-term let category with minimal reference to the planning system.
Local authority interpretation
But of course local authorities will take further action. Local politicians are likely to respond to local demand by removing the permitted development right that allows a property to become a “short-term let”. That power could be used across all or part of a local authority area. It seems unlikely to be exercised for parts of a local authority area in areas of high tourist demand. It is also unlikely that a local planning authority would require full planning applications for properties to pass out of the short-term let class.
The result would be a (probably slow) transfer of properties out of the short-term let class back into the private use sector, rental or otherwise. In other words, further moves of property to the short-term let sector would be substantively prevented but (given the current tourist demand) it seems unlikely that a significant new number of local homes for local people would result.
Further, one would expect planning authorities that are concerned about the proliferation of short-term lets to the detriment of the local communities to introduce planning policies that discourage or prevent the increase of short-term letting property in their areas.
It seems likely that, if implemented, the proposed reforms would freeze the current mix of short-term lets and other housing as it stands, so while the housing situation might not get worse, it is unlikely to get better without more action. Only new-build houses not available for tourist use will help – provided the new developments do not destroy the beauty that attracts the tourists in the first place.
Tristan Ward is a partner at BDB Pitmans
Photo by Jonathan Sykes/Pexels
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