Short-term lets: London

Londoners to get up-to-date short-term letting laws

26  March 2015

Robert Mullarkey discusses relaxation of short-term letting in London

Short-term letting is becoming very common in the London market with online short letting sites, such as Airbnb, revolutionising the way homeowners in areas popular with tourists and business people use their property. Short-term letting allows for a high return on investment and a quick turnover of tenants. Uniquely it attracts businesses offering short-term rental accommodation as well as people who, for short periods, infrequently, are letting their spare room or their home.

Currently, property owners in London are prevented from letting out their properties for a continuous period of fewer than 90 nights, under section 25 of the Greater London Council (General Powers) Act 1973. The restrictions under this provision mean that the use of a residential premises for temporary sleeping accommodation for fewer than 90 consecutive nights is a material change of use, for which the planning permission must be obtained from the relevant local authority. It is not an offence to act in breach of planning consent but if a local planning authority detects the infraction it can then ask for more information or for the activity to cease. If information is not provided or the breach continues then there is a possible fine of up to £20,000 for each separate offence, or short let.

There has been pressure from people living in London to relax this strict regime, especially after the 2012 Olympic Games. In February 2015, the Department for Communities and Local Government released a policy paper called Promoting the sharing economy in London. The paper set out the response to the government's consultation on the topic and its intended plans to change the bureaucratic and disproportionate law surrounding the prohibition on short-term lets in London. Section 44 of The Deregulation Bill permits the Secretary of State to make regulations to permit a relaxation of the current restrictions on short-term lets or to abandon them altogether. The current legislation is cumbersome and difficult for many authorities to enforce. It is thought that a relaxation will be beneficial to the tourist industry as well as to homeowners who wish to supplement their income.

The aim of the relaxation of the changes of use is to bring short lettings in London into the 21st century

It is important to note that the proposed changes do not allow homeowners to begin their own short-term letting businesses. The amendment does not change the 1973 Act, it allows for the Secretary of State to make regulations that will do so. To ease the fears of some London residents that their block of flats could become weekend hotels, the amendments impose some restrictions and safeguards. Under the proposed changes short-term letting of a residential premises will be limited to a maximum of 90 (non-consecutive) days in any one calendar year. This is an attempt to avoid a property being used as temporary sleeping accommodation throughout the year. However, it remains to be seen whether local authorities will find the provision more or less difficult to enforce than the current legislation.

Further safeguards against concerns over anti-social behaviour include:

  1. A local authority will have the power to withdraw the relaxation from particular properties where there is a successful enforcement against a statutory nuisance;
  2. In exceptional circumstances, local authorities will be able to request that the Secretary of State grants a localised exception to the relaxation, where there is a strong public interest in doing so;
  3. The resident must be liable for council tax to benefit from the relaxation. Therefore this will only benefit those who are actually listed as living in the property.

The aim of the relaxation of the changes of use is to bring short lettings in London into the 21st century. It is important to note that the relaxation is aimed only at homeowners or renting residents to permit them to let out their property for a brief period while they are away and not landlords running a commercial short–term letting operation. Before engaging in this type of short-term letting, people should check the existing clauses of their lease which may prevent long leaseholders or tenants from subletting their property. A breach of a covenant in the lease provides grounds for forfeiture.

Robert Mullarkey is a Paralegal in Anthony Gold's housing and property dispute team

Further information

Related competencies include Property management, Leasing/letting