What do government proposals mean for short-term let investors?

Just as buy-to-let attracted more government attention as the sector grew larger, so too has the short term let market. The most recent proposed intervention comes in the form of a consultation into whether properties let on a short-term basis in England should come under a different use class to dwellings, giving local authorities greater control over the number of short-term let properties in their area.

The government’s reason for this proposal is that, while short-term lets can play an important part in supporting the visitor economy, which can benefit an area, the rise in the number of short-term lets in certain areas has prompted concerns. It says that high concentrations of short-term lets in areas such as coastal towns, national parks and some cities is reported to adversely impact the availability and affordability of homes to buy or to rent for local people and on the sustainability of communities more broadly.

With this in mind, the government is proposing the introduction of a short-term let use class and the introduction of new permitted development rights for the change of use from dwelling to short-term let and vice versa, which it says will provide flexibility where short-term lets are not a local issue.

It is also seeking views on how homeowners might be provided with flexibility to let out their sole or main home for a number of nights in a calendar year looking into the introduction of a planning application fee required where permission is required for the development of a new build short-term let.

The consultation, which runs until 7th June, will seek views on any potential impacts on businesses, local planning authorities and communities from the proposed measures – but what of the impact on investors?

On the surface, another layer of bureaucracy for investors in short-term let property looks like an unnecessary extra hurdle. However, given the scrutiny the sector has come under, the proposals in this consultation seem to be relatively light touch.

Many property investors are already well-versed in using permitted development rights to help them achieve their investment objectives, and while it is another step of the process, it does at least provide certainty, unlike a planning application. It’s likely that investors in many areas will be able to buy a residential dwelling and change its use to short-term let without too much trouble.

In those areas with a high concentration of short-term lets, where permitted development rights may not be granted, there’s also a positive takeaway for investors, as it will limit over-saturation of supply of short-term let properties, helping to maintain the prices that can be achieved.

Only time will tell how this consultation will eventually be implemented in policy, but at this stage, it seems a sensible response to high profile concerns. There continue to be opportunities for investors in short-term lets and, while these proposals will give more control to local authorities, they fall very short on slamming the door on those opportunities.