How will a reform on short-term use of residential properties affect London residents?

Section 25 of the Greater London Council (General Powers) Act 1973 (the ‘Act’) provides that the use of residential premises for temporary sleeping accommodation for less than 90 consecutive nights in London is a change of use, for which planning permission must be obtained from the relevant local authority. London residents who fail to secure planning permission face a potential fine of up to £20,000 for each short let.

In recent years, short letting sites, such as Airbnb, have become more and more popular amongst tourists. It is an alternative way of finding accommodation and can be a cheaper option than booking a hotel or a B&B.

The Government has now identified the need to change the outdated legislation and the amendments to section 25 of the Act were introduced through the Deregulation Bill, which is now passing through the House of Lords.

It is argued that such reforms will not only benefit London’s tourism industry and promote economic growth, but it will also allow London residents to be more flexible and enjoy the freedom to temporarily let their homes whilst getting extra income. Airbnb has also welcomed the proposals, claiming that “it will benefit self-employed, freelance or part-time workers seeking temporary residence in London”.

However, there has been opposition to these reforms. Westminster Council has openly rejected Government proposals arguing that short-term lets could in some instances lead to “housing benefit fraud and illegal immigration, to vomit on the doorstep and fires in the corridors”. Others argue that it could turn some residential properties in hotels and disrupt neighbourhoods.

In order to address these issues, the Government intends to restrict short-term letting of residential premises to a maximum of 90 days in a calendar year. It also intends to put in place the following safeguards through regulations:

• to benefit from the new flexibility the properties must be liable for Council Tax (thereby excluding business premises);

• the new flexibility can be withdrawn following a successful enforcement action against a statutory nuisance; and

• in exceptional circumstances, local authorities will be able to request that the Secretary of State agrees to small localised exemptions from the new flexibility, where there is a strong public interest to do so.

Please note that these changes will not affect any existing clauses in tenancy contracts which prohibit sub-letting by tenants.

We will now have to wait and see what the Government decides to do in relation section 25 of the Act. One thing is certain; they will have to find a balance between reforming the outdated and restrictive legislation and making sure that the short-term letting will not turn into a nuisance to the London residents. Maybe one of the Westminster Council’s proposals to reduce the amount of time a property can be let from 90 days to one month is a good way of making sure that the property will be used for holiday purposes only.