A landlord has lost his planning battle to rent out a city centre investment property as a holiday let.
Oxford City Council banned the landlord from letting out the home after neighbours alleged holidaymakers staying there upset the neighbourhood with antisocial behaviour and noise.
A planning enforcement notice was served ordering the landlord to stop renting out the home as a holiday let.
The landlord appealed to the independent Planning Inspectorate who rejected his arguments and upheld the ban.
Now, the council wants to stop other landlords from switching rental properties to holiday lets without applying for planning permission for change of use from a home.
The council claims 1,500 homes in Oxford were offered by a single web site as holiday lets in just one week earlier this year, which has led to a loss of permanent homes, regular loud parties and sometimes illegal activity, like homes used as brothels.
Holiday let web site AirBnB is backing councils by urging the government to change the law to make landlords seek planning permission for converting homes to short term rentals. The move follows a flood of complaints from neighbours about noise and bad behaviour from rowdy holiday homes in London and Cornwall.
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AirBnB wants government action
The portal wants the government to set up a register of short-term let landlords so councils can easily identify the owners of problem properties for enforcement action.
Patrick Robinson, director of public policy at Airbnb, said the system would “give authorities the information they need to regulate home sharing effectively, and that ultimately makes communities stronger.”
Camden Council in London is backing the call, claiming up to 7,000 homes in the borough are illegally rented out as holiday lets for more than 90 days a year, the maximum allowed by regulations in the capital.
“The result of the explosion in the number of short-term rentals is the loss of permanent housing, and increased rents, all at a time of significant housing need,” said Danny Beales, cabinet member for investing in communities.
“They also often create amenity issues for residents, like creating noise disturbance and rubbish issues. We need the government to act and introduce a mandatory register of short-term lets. We also believe councils should have the power to introduce an overnight visitor levy, to deal with the related costs.”
Short-term let planning permission
Oxford City Council wants landlords to apply for planning permission when switching a home to a holiday let on the grounds of a ‘material change’ to the use of the property.
The planning inspector agreed that a ‘largely transient pattern and frequency of occupation’ supported the council’s argument in the case before him.
Councillor Alex Hollingsworth, Oxford’s cabinet member for planning and housing delivery, said: “There are hundreds of short let properties in Oxford and almost none of them have planning permission. This means we have no record of which properties are short lets or any way of taking quick action against landlords.
“Short lets in Oxford have resulted in a loss of valuable family homes. In some extreme cases, short lets have been used for regular loud parties and even as brothels. This case shows that we do take the issue seriously and we will chase landlords through the legal system if necessary.”
Why are landlords switching to short-term lets?
A holiday let is tax-treated as a business property rather than as a buy to let or house in multiple occupation (HMO).
Most holiday lets make more profits for owners as nightly or weekly tariffs are much higher than rents charged to renters on assured shorthold tenancy agreements.
Many councils in tourist areas want government action to overhaul the rules as they pay business rates rather than council tax. As small businesses have rates exemptions, this means councils have lost council tax revenues but still must pay for services, like collecting the rubbish and cleaning the streets.
Holiday let landlords also have a different tax regime from their buy to let counterparts. This allows them to continue to claim higher rate tax relief at 40% or 45% on mortgages, while buy to let landlords can only claim a 20% tax credit.
Among other tax benefits, like capital allowances for furniture and equipment, holiday lets also qualify for Entrepreneurs Relief, which gives a capital gains tax discount when owners dispose of a holiday home.
What makes a home a holiday let?
The tax gains for holiday lets come with some restrictions. A short-term holiday let must be:
Fully furnished so a guest can walk in the door and immediately use the property like a home
The letting must be on a commercial basis – mate’s and family rates don’t count as letting days
- Available to let for at least 210 days in a year
- Let to paying guests for at least 105 days in a year
- Lets of more than 31 days in a row can only take up 155 days a year – in practical terms that means longer lets are allowed off-season
If a property fails to meet these conditions, landlords can sometimes average occupation over several short-term lets they own or rely on a period of grace.
The period of grace will apply to properties unlet due to Covid-19 because lettings were cancelled during the pandemic due to unforeseen circumstances.
Holiday let FAQ
Holiday let neighbours and councils are calling for a change in planning rules to outlaw operators switching family homes to short term lets in popular tourist areas.
But current rules allow landlords to cash in on the spending power of holidaymakers without giving councils the power to regulate where they spring up.
If you are a landlord thinking about making the switch, here are the answers to some of the most asked questions about the controversial move.
Why is planning permission needed for a holiday home?
Planning rules in the Town & Country Planning Act 1990 say any development involving a ‘material change of use of any buildings or other land’ is subject to planning permission.
Councils argue that regular tenant changeovers and the disruption to a neighbourhood that comes with them is a material change of use and in many cases diminishes the local housing stock, so should be subject to planning consent.
In the Oxford case, the planning inspector agreed.
Does the ruling mean holiday homes need planning permission?
Yes and no. Certainly landlords should consider the possible planning implications when opening a home as a holiday let but until the law is changed, each case must be decided on its own merits.
Although the planning inspector has set a precedent, his decision is not law.
Why is AirBnB stepping into the row?
Executives at AirBnB are protecting their interests and don’t want to see any action that impacts their profitability as the company intends to go public soon. Their consultation is a test of public opinion and a bid to get on the right side of the law before any official action is taken.
Have any cities taken action against holiday lets?
Yes, but not in the UK. In Madrid, the city council has ruled every holiday let must have a private entrance, removing thousands of apartments sharing an entrance from the market, while Berlin can fine owners up to €500,000 for letting out an unlicensed short-term let or leaving the property without a permanent tenant.
What’s the UK government doing to clean up holiday lets?
So far, the UK government has taken no action other than to express sympathy with councils tackling what they see as a major problem.
In Scotland, the regional assembly is introducing ‘control areas’ next spring to improve safety standards in holiday lets and to give councils powers to impose other conditions ‘appropriate’ for identifying landlords and dealing with problems triggered by short-term lets in their area.
Scottish politicians claim landlords are using holiday lets as a loophole to avoid strict buy to let and HMO regulations.
