Holiday let planning permission explained

In recent years, there’s been a boom in holiday lets. There are different reasons for this. Firstly, COVID-19 made international travel difficult or impossible. As a result, more people opted for ‘staycations’ over foreign holidays, while there was a boom in people letting out properties via services such as Airbnb. Secondly, many buy-to-let landlords have seen their margins shrink due to factors such as the withdrawal of mortgage relief. Many will soon have to invest significantly to improve the energy ratings of their rental properties and make sure they meet the Decent Homes Standard. As a result, some landlords have switched their properties to become holiday lets. While this can be a good solution for some, this month the government announced a new requirement for holiday let planning permission. In this post, we look at what this means for current and future holiday let landlords.

What’s the story about holiday let planning permission?

At the moment, there’s a significant housing shortage in the UK. This is particularly pronounced in many popular tourist areas where holiday lets are common (and often growing in number). For example, in Keswick in the Lake District, half of residential properties are now second homes or holiday lets.

The government is worried that situations like these are pricing local people out of the property market. To counter this, Levelling Up Secretary Michael Gove has announced plans to introduce a system of holiday let planning permission.

How will the new planning system work?

The new plans are currently under consultation. However, if they come into force, you’ll need planning permission to change the use of your property from a ‘C3 dwellinghouse’ to a ‘C5 short-term let’.

As the plans stand, you’ll need to get permission to turn a property into a permanent holiday let. You’ll also need it if the property is a second home and you advertise it for overnight or weekend stays.

If you wish to let out your main home for some of the year, the government is consulting on how many nights you can do this without having to apply for holiday let planning permission. This could be between 30 and 90 nights per year.

What happens if I already have a holiday let?

There is a glimmer of good news for holiday let landlords. If you already have a short-term let property, it will automatically be transferred into the C5 class. You will only need to get holiday let planning permission if you change the use of a property after the legislation has passed.

Is getting planning permission expensive?

A change of use application currently costs around £450. If you needed someone like an architect to help create plans and other documents, then you’d need to pay their fee on top.

In general, a planning application will be decided within eight weeks. If it’s rejected, you can make a follow-up application without paying again.

It’s early days, but in areas that already have a lot of holiday lets, it’s likely that most applications for change of use will be rejected. Much will depend on an area’s local plan.

There’s also a registration scheme round the corner

In more bad news for holiday let owners, the government is also planning to create a register for short-term lets. It’s not clear yet whether owners will be charged a single fee, or a fee per property. We also don’t know whether there’ll be an additional annual fee. It’s also possible that online platforms such as Airbnb will be forced to contribute to the costs of the scheme.

Is it worth converting my property to a holiday let?

If you convert a property to a holiday let, you won’t need holiday let planning permission if you do it before the new legislation comes into force. However, you do need to be aware that there may be local regulations that restrict what you can do. For example, in Scarborough, the council has voted to double council tax on second homes. In St Ives, sales of new-build properties as second homes have been banned since 2016.

Perhaps the main perk of having a holiday let over a traditional rental property is that you can still offset mortgage interest payments against income tax. However, an Office for Tax Simplification report recently recommended removing this perk, so its future is far from assured.

What next?

We’ll continue to update you on how the introduction of holiday home planning permission progresses, along with other relevant news. However, if you are a landlord, it’s important to have an accountant who truly understands your sector. THP’s Landlords’ Platinum Accounting Service is designed to help you make your portfolio more profitable and easier to manage. You can find out more about its benefits here.