Save, make, understand money

Buy To Let

Crackdown set for holiday lets in England

Written By:

Landlords with short-term or holiday lets, and anyone renting out a room through sites such as Airbnb may be required to register for a licence under government proposals.

A formal review of the holiday letting market in England has been launched amid concerns that locals are being priced out of popular tourist destinations, and to ensure accommodation is up to standards.

The government said it is seeking to understand the impact of the boom in short-term holiday lets in England, as well as the opportunities and challenges for holidaymakers and communities.

Tourism minister, Nigel Huddleston, said a scheme could be developed to involve physical checks of premises to ensure regulations in areas including health and safety, noise and anti-social behaviour are obeyed.

Other measures considered by the government include a registration ‘kitemark’ scheme with spot checks on gas safety regulations, as well as a registration scheme for hosts before they can operate.

Further, in London it will look at measures to tackle anti-social behaviour, while allowing Londoners to rent out their homes.

Huddleston said: “We’ve seen huge growth in the range of holiday accommodation available over the last few years.

“We want to reap the benefits of the boom in short-term holiday lets while protecting community interests and making sure England has high-quality tourist accommodation.”

While no decisions have been taken, he said the review “will help work out the options” to ensure communities are protected.

It comes as sites such as Airbnb have seen massive growth in recent years, with a 33% increase in UK listings from 168,000 in 2017 to 223,000 in 2018 recorded. For a typical host, they can earn an average £3,100 a year listing their property.

Short-term holiday tax relief

In part, the growth of short-term holiday lets has been driven by the increased ease for anyone wanting to advertise a spare room for rent.

However, the withdrawal of tax relief available to landlords letting property on a long-term basis where tenants sign up to a lease for one or more years has also skewed the market.

Changes announced by the former chancellor, George Osborne, phased out rules allowing landlords to pay tax on just their profits by claiming tax relief on all costs associated with letting a property.

Now landlords must pay tax on their revenue for properties let on an assured shorthold tenancy agreement, slicing the returns available.

Short-term holiday lets are exempt however, with landlords still allowed to pay far less tax on their profit only.

Housing minister, Stuart Andrew, said while holiday let sites like Airbnb have helped boost tourism across the country, “we need to make sure this doesn’t drive residents out of their communities”.

He said: “We are already taking action to tackle the issue of second and empty homes in some areas by empowering councils to charge up to double the rate of council tax.

“This review will give us a better understanding of how short-term lets are affecting housing supply locally to make sure the tourism sector works for both residents and visitors alike.”

‘Little wonder landlords have jumped ship to the holiday lets market’

Ben Beadle, chief executive of the National Residential Landlords Association, said: “The growth in holiday lets is a direct consequence of the government’s attack on long-term rented housing.

“Tax policies actively discourage long-term investment in the private rented sector by landlords. With a Housing Secretary that wants to shrink the size of the sector, it is little wonder many landlords have jumped ship to the holiday lets market.

“As a result, for many in holiday hot spots finding a long-term home to rent is all but impossible. With demand for such housing at a record high, all it is doing is increasing rents when tenants can least afford it.

“The government needs to end its anti-landlord attitude and develop pro-growth tax plans to help renters access the housing they need.”

Devolved administrations

The review applies to England only as Scotland, Wales and Northern Ireland already have plans to regulate holiday lets.

The Scottish government set out legislation requiring all local authorities in the country to establish a licensing scheme by October 2022. In Northern Ireland tourist accommodation cannot be provided without a valid certificate issued by the national tourist board. Wales has publicly stated its ambition to establish a statutory registration or licensing scheme.

And in other countries, anyone wishing to advertise and provide guest accommodation in Portugal must register electronically before doing so, Greece requires anyone renting out their home to paying guests to register, and, in parts of Ireland designated ‘Rent Pressure Zones’, hosts are only allowed to short-term let their primary residence after having registered.

A statement from Airbnb said: “Airbnb recognises the historic housing and tourism challenges facing the UK and we want our platform to be part of the solution. We welcome regulation and have led the way in championing progressive rules for our industry.”

Airbnb first put forward proposals for a UK Host Register last year, following a UK-wide consultation with communities, local leaders and tourism experts. The UK government then committed to seeking views on this initiative as part of its Tourism Recovery Plan.

“Airbnb has a long history of supporting regulation in the UK and was the first platform in London to automatically limit how often hosts in London can share their homes, with the Mayor of London calling for other platforms to follow our lead. We are also proud to lead our industry on tackling anti-social behaviour and just this week have officially codified our global ban on parties,” the statement added.