Holiday let proposals shut stable door after the horse has bolted

Apr 13, 2023 5:49 PM

Today the government published new plans for regulating holiday lets in England. As we've reported, thousands of homes have been lost to the tourist sector in recent years, pushing up rents in holiday hotspots like Cornwall, the Lake District and Norfolk. 

Unfortunately proposed planning rules will not reverse the recent trend.

There are two parts to the proposals: a register of holiday lets and a new requirement on operators to have planning permission.

The register is a very good idea - it will give councils a clear idea of the scale of the problem which will help their decisions about housing supply. And if it is designed right it will complement the register that we're expecting the government to introduce for private rented properties and help identify where homes are shifting between the sectors. 

The planning proposals are less positive. If there is a change of use of the property from a dwelling (i.e. home) to a holiday let, the landlord will need planning permission. The government says that this will give councils control over their local market.  

Unfortunately, under the government's plans, existing holiday lets would get automatic planning permission - including homes that tenants were evicted from to make way for tourists.

And it's likely that those tens of thousands of homes would be lost permanently.

Because renting a home to tourists for a couple of months can bring in as much income as a tenant would pay for a full year, houses are more valuable as holiday lets than they are as tenancies. If a house gets planning permission to be a holiday let it would suddenly become a lot more valuable. The person who owns it would be very unlikely to apply for it to become a home again.  

The planning proposals might prevent newly built homes from being bought by holiday let investors, but it would take years if not decades for new supply of homes to overcome the rapid loss of homes holiday hotspots have experienced in recent years. 

Local people will continue to be priced out of the areas they grew up in.

Another risk is that landlords with tenants in these areas will now evict them so they can become holiday lets and lock in that planning permission and the associated increase in value once the new rules come into force. This is incredibly worrying.  

To avoid locking in the recent loss of homes, and push houses back into the residential market, the government should instead give councils powers to require holiday lets to have licences. Licences would expire after a set period, and councils with severe housing shortages could place caps on how many could be issued and renewed.

We will be making this argument to the government in the consultation and will have more to say in the weeks ahead.

We recently discussed the kind of legislation needed around holiday lets with Rachael Maskell, the Member of Parliament for York Central, who is currently attempting to pass a Private Members' Bill in order that councils can license holiday lets. You can read more about her bill here and listen to the podcast here.