Short-term letting is a type of property investment strategy that transforms a flat into a “temporary sleeping accommodation.” This arrangement allows people to pay for a stay in your property over a short period, around 90 days or less. It’s just one of the many strategies to rent out your property but it has a higher income potential since the rate per night for short lets is higher compared to long-term or mid-term letting.
Before you consider using short-term rental as your strategy, it’s crucial to educate yourself about the different legislations that regulate this market.
One of these regulations is called Planning Permission. Multi-property owners who wish to maximise short-term letting as a strategy should understand how this affects the earning potential of the property.
In this article, you’ll learn the basic facts about Planning Permission. You’ll get answers to the common questions about it and tips to help you stay compliant.
The Story Behind the Planning Permission
Do not confuse the short-term rental Planning Permission with the one used in real estate development. The latter is part of the application process when securing permits and legal documents before constructing buildings and structures.
The Planning Permission for short lets allow multi-property owners to rent their property for more than 90 days each year.
If you remember, property owners in London have to comply with the Renter's Reform Bill where short-term rental properties are limited by 90 days. This restriction is meant to protect the housing supply in London. By imposing the 90-day restriction, London property owners are forced to use long-term letting strategies if they want to keep earning rental income. This gives residents more options to live in.
But multi-property owners who want to stick to a short-term rental strategy need to get Planning Permission. This will allow them to short for more than 90 days.
Because of the higher earning potential of short lets, property investors bought several properties to rent them out on platforms like Airbnb, Booking.com, etc. Unfortunately, this aggravated the housing supply in London. Residents found it harder to find a property they could buy or rent for the long term.
This required the government to step in. While the local authorities understand the role of short lets in boosting the tourism economy, it cannot be denied that it's increasing the housing problems in some parts of London. To find a balance, they initiated a consultation process to determine how to keep the short-term letting market alive without compromising the housing supply.
The result led to the regulation of shortlets through Planning Permission.
How the Short Let Planning Permission Affect You
Implementing this short-term rental rule creates a transparent framework to monitor this letting industry. This national register or Host register, will collate essential information about the host’s details. It will allow the local government to check for illegal short-term rental properties.
This will also make it easier for the local authorities to monitor and ensure compliance. They can easily see which shortlets are paying council taxes. These taxes will fund local services and improve communities where these properties are located. These can lead to housing reforms and more sustainable developments in the community.
Who does it apply to?
This new short-term letting rule applies to all London properties that will be used as a short let for more than 90 days per calendar year. Although there’s no physical change in the property, the fact that it will be used as a temporary accommodation and not a permanent residence makes it a “material change” in the eyes of the law. So whether you’re just short-letting now or you’ve done it in the past, as long as you haven’t registered the property as a short-term rental, you need to submit your application for this planning permission.
Who is exempted?
If you have no plans to rent the property beyond an accumulated period of 90 days, then you don’t need to apply. Also, if you prefer to rent your property using mid-term or long-term letting strategies, this rule doesn’t apply to you as well.
What is needed to apply?
Start by familiarising yourself with the planning permission in the location of your property. Go to the local council website and read the instructions to apply. Different locations may have varying processes and requirements so you need to specifically look into the locations of all your properties.
Once you’re sure you have the right information, follow the instructions and add your property to the national register for short-term rentals.
Check all your properties to ensure complete compliance with the new rules and regulations. Make the necessary changes so your planning permission gets approved.
Consequence of non-compliance
Failing to comply with the planning permission compromises your ability to market your properties for short-term letting. The local authorities can enforce action against you through penalties.
It can also lead to legal action and keep you from short-letting your property until the matter is settled. This will incur costs that may negatively affect your portfolio.
Get Help to Stay Compliant
The planning permission may add to the things that multi-property owners have to think about but it’s all for a good cause. The government has to find a way to balance the need for an affordable home without completely restricting the short-term letting industry.
By complying with these laws, you’ll secure your property’s profit potential and avoid legal issues that may compromise your whole portfolio.
While all these legalities seem confusing, there’s a way to make it easier.
Partner with a property management company. Opago can help with compliance issues so you can focus on maximising the rental income from your portfolios. You won’t have to deal with the time-consuming process - which can be magnified if you’re a multi-property owner. Apart from the planning permission, Opago can also help with legal documentation, inspections, testing, etc. You can get access to the Opago app that automates reminders to ensure you won’t miss anything.
If you’d like to know more about how Opago can help with compliance, contact us. We’d love to have one of our property experts sit with you to discuss your properties.
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