The recent surge in holiday lettings, reported by the BBC last year as a 40% increase in England over three years, has highlighted both the potential for significant income in this sector.
Unlike regulated hotels and B&Bs, short-term lets have remained largely unregulated, leading to concerns about their impact on communities and housing markets – but not for much longer.
Introducing the Levelling Up and Regeneration Act
The Levelling Up and Regeneration Act, which received Royal Assent on 26th October 2023, introduces a key change with Section 228.
Set to be enforced from 26th December 2023 onwards, this section mandates a licensing scheme for short-term lets, including holiday cottages and self-catering apartments.
The goal is to uphold standards and mitigate negative impacts on communities and housing markets.
Providers of these lets will now need to ensure their accommodations meet minimum quality and safety standards.
Exploring the Proposed Licensing Scheme
The Department of Culture, Media and Sport’s consultation, which concluded last month, presented three options for the licensing scheme:
- Local Authority Opt-In/Opt-Out: Similar to the Home in Multiple Occupation license, local authorities can choose to participate or not.
- Local Authority-Run Licensing: This would eventually become mandatory for all short-term holiday lets.
- Mandatory National Scheme: Administered by the English Tourist Board.
Options one and two might create a varied landscape, with different requirements per local authority, potentially leading to administrative burdens for hosts, especially those with extensive portfolios.
The final legislative details, including the specifics of registration and renewal processes, are still pending clarification, despite their impending introduction.
Non-compliance with the new regulations could lead to substantial penalties, including fines, remedial orders for unsafe properties, and potentially a ban from letting.
An indirect enforcement mechanism might also emerge, where rental platforms require compliance documentation before allowing listings.
Time to act
For landlords and property investors, this Act signals a significant shift. Staying informed about the developing regulatory landscape is crucial.
It is advisable to begin preparing for these changes by reviewing the quality and safety standards of your properties and understanding the potential implications of the different licensing options.
As always, compliance is key to ensuring a successful and legally sound investment in the dynamic short-term and holiday letting market.
For advice on this and other issues related to property investment, please get in touch with specialist property accountants and advisers.
