Published: 26/10/2024 By Amanda Hunt
The government has confirmed its plans to introduce a registration scheme for short-term let properties in England. This is to supplement the previous announcements that:- Second homes need to be rented out for a minimum of 70 days per year to access small business rate relief since April 2023, rather than paying council tax
- Councils will be granted powers to impose higher rates of council tax on empty and second homes - although a new consultation suggests landlords may see a grace period on these rules
New proposed rules have been announced to introduce a planning "use class" for short-term lets that are not used as part of a sole or main home. This new introduction will support local residents in areas who are finding it difficult to afford or buy housing due to high numbers of short-term lets, and prevent communities from "hollowing out". A mandatory national register will also be introduced to local authorities to give local authorities an idea of the amount of short-term lets in one area. Homes that are already dedicated as short-term lets won't need to apply for a planning application, and instead be automatically reclassified into the new "use class".
What tax rules are currently in place for short-let properties?
As it stands, second home owners can access small business rates relief by declaring an "intention to let" the property out to holidaymakers for short periods totalling a minimum of 140 days per year. Colliers has reported that this loses local authorities £110 million a year due to the lack of proof required.
For empty homes not eligible for business rate relief, they currently must pay council tax but the local council can decide to give a discount - although a council tax premium would need to be paid if the property was empty for two or more years.
How are the tax rules changing?
To benefit from business rate relief from April 2023, second home owners will need to prove that they have let their properties out for a minimum of 70 days, and be "available" to let out for a minimum of 140 days.
The government has also confirmed that it will give councils the power to double the standard council tax rate on any home left empty for longer than a year, rather than two years as is currently the case.
What do the new rules aim to achieve?
The new rules on council tax will encourage more empty homes "back into productive use, while raising additional revenue to support local services and keep council tax down for local residents."
What else has been proposed to regulate the short-term let sector in England?
The government also committed in June 2021 to look into the possibility of a "tourist accommodation registration scheme" in England, through the Tourism Recovery Plan, an approach that was confirmed in the new measures announced for the Levelling Up and Regeneration Bill in December 2022. A consultation has been launched into whether new short-term lets would need planning permission, particularly in tourist hotspots.
MP Tim Farron, who first proposed doubling council tax on empty second homes in January 2022, has also proposed a "seven point plan to limit the number of second homes", to help solve the housing crisis.
What is the impact of short-term lets on local communities?
Short-term lets is a growing segment of the hospitality and rental sectors. While giving tenants more flexibility in the short term and often providing them with a cheaper alternative to traditional holiday accommodation, concerns include their impact on local housing markets - where an influx of investors of holiday lets may mean fewer long term rentals available - and compliance with tax and health and safety regulations.