Do you currently rent out your property through the popular Airbnb website?
Is your total letting period over 90 days per year?
If so, there are certain rule changes that you need to know about: Change of Use Planning Permission for Airbnb.
Short-term rentals in London is now subject to a planning restriction. London councils classifies these residential premises as temporary sleeping accommodation which is a “material change of use” and for this reason you will require planning permission…
Did you know that Airbnb cracks down on London hosts who ignore the 90 days planning permission rule?
Airbnb has become a global phenomenon. For those that haven’t heard of it (where have you been?) it was set up on the basis that people with property in popular tourist areas could basically swap their home for one in another location for a couple of weeks and make their holiday cheaper. You were, in essence, swapping homes or a week or two at a time with someone else, somewhere else on the planet.
Fancy swapping your home in London with one in Paris, New York or Rome for a week? Well, Airbnb is the place to visit. But, as with any big idea, it spawned an industry all of its own. People bought up property or offered their existing properties on Airbnb as a kind of easy way to let it out only a short term basis to maximise their income.
Entrepreneurs have turned their property portfolio in London into a money-making machine that would generate huge lettings rental to the housing market. We find that real estate investors active in London have an affinity more towards short-term lettings rather than focusing on HMOs. Not to mention that the company Airbnb is valued at around $30 billion and through their own figures on the UK website, they estimate that over half of their hosts bring in an income of over £43,000 per annum. No wonder this has become its own industry!
Research by Airbnb (2016) suggests that homesharing makes positive contributions to London’s economy. This view has been supported by the government, for example their recent decision to offer tax relief for micro-entrepreneurs and referencing online homesharing (Osborne 2016), and is echoed by wider research into the benefits of the sharing economy (PwC 2016), so supporting the sector is important. Snelling C, Colebrook C and Murphy L (2016) Homesharing and London’s housing market: Summary report, IPPR. https://www.ippr.org/publications/homesharing-and-londons-housing-market
In February 2015, local councils were given the power to manage the housing regulation in their own community. As a result, many councils have used Section 44 of the Deregulation Act to require anyone letting out their property on Airbnb (or other similar sites) to get planning permission to do so. It has changed the game for many landlords as they will require planning consent for their short-term lettings. With nearly 50,000 properties available in London alone through the Airbnb portal, this is big business.
I’ll explain now:
The Act has given the local councils of London and further afield the power to stop people from letting out their property for income if it is let out for more than 90 days of the year. Councils will become stricter on this as their local community demands more action on housing issues. The impact on the short term rental market is expected to be seen as people become more aware of this legislation and act upon it.
Things may be getting tougher for landlords that want to maximise their income through short-term rentals. For example, AirBnB block hosts in London from renting out their homes for more than 90 days a year without Airbnb planning consent and encourages hosts to think carefully about their responsibilities.
Being found without the correct Airbnb planning permission can lead to a fine of up to £20,000 so landlords need to be aware of the pitfalls of ignoring the regulations.
The local councils are charged with protecting their own neighbourhoods and they may consider that a property acting as a guesthouse in everything but name does nothing to lessen the acute housing problems that London is facing.
The local councils even encourage members of the public to report homes that they believe are being used as short term holiday lets on sites such as Airbnb on their own websites. Plus, their online investigation teams will be able to start sifting through what is offered on the Airbnb website to track down landlords that are abusing the system.
It gets worse: Local councils have taken on planning enforcement officers to investigate and prosecute landlords that are letting out on a short term basis without gaining the necessary Airbnb planning permission. The result is that people are faced with three possible options:
• Flout the law and run the risk of being found out
• Go back to traditional letting and face a drop in income
• Go through the change of use planning application process
And there are other considerations too. Most buy to let mortgages and landlords insurance products are aimed specifically at properties let out on 6 month or 12 month Assured Shorthold Tenancies or that comply with local regulations. Letting out a property in the short term as a kind of guest house may be in breach of both mortgage agreements and may leave insurance claims unpaid.
The simple fact is that the best route is to seek the planning permission you need and work with the local council rather than against them.
As you probably already know that Airbnb has installed a day counter on London listings and bookings that go beyond the limit will be blocked. We are able to help landlords and investors to secure the Airbnb Change of Use Planning Permission that is required to carry on with the lucrative Airbnb model of letting out a property.
Many local councils will have quite stringent rules when it comes to gaining permission so it pays to use a professional company that can smooth the process. It is best to comply with the law, especially when you can call on the professionals to help you out.