Gove clamp down on short term lets like Airbnb could lead to ‘two-tier system’

A change in planning rules that could mean councils can clamp down on homeowners renting out their second or third homes on a short-term basis to holidaymakers could lead to a “two-tier system,” property experts have warned.

Under the proposed reform, announced by Gove today, property owners who let out their homes to visitors will be asked to seek planning permission, alongside placing their name on a mandatory national register for short-term lets. 

Homeowners can continue to let out their own main or sole home for up to 90 nights a year. 

Michael Gove, Secretary of State for Levelling Up Housing and Communities, said: “Short-term lets can play an important role in the UK’s flourishing tourism economy, providing great, easily-accessible accommodation in some of the most beautiful parts of our country.

“But in some areas, too many local families and young people feel they are being shut out of the housing market and denied the opportunity to rent or buy in their own community.”

According to a report by Visit Britain, last June, there were over 432,000 short-term rental properties across the UK. 

In 2022, short-term lets were thought to account for over seven per cent of the total homes across 15 of the most popular holiday destinations in Britain, a report by GetAgent.co.uk said. 

Businesses such as Airbnb have surged in popularity among landlords because in some cases they can make more money by renting to different people on a temporary basis as opposed to having a permanent tenant.

Amanda Cupples, general manager for Northern Europe, Airbnb said: “The introduction of a short-term lets register is good news for everyone. 

“Families who Host on Airbnb will benefit from clear rules that support their activity, and local authorities will get access to the information they need to assess and manage housing impacts and keep communities healthy, where necessary.”

However, today’s announcement has sparked concern from estate agents across the UK who have dubbed the scheme “ironic” and warned it could lead to a “two-tier system”. 

Lucian Cook, head of residential research at Savills said “there is little doubt” the short-term rental market has taken “much-needed housing stock out of the private rented sector.”

“Indirectly that has put more pressure on local planning authorities to deliver more homes in order to meet underlying housing need,” he said. 

“Longer term this also has the potential to create a two-tier market between those properties with and without a consent, especially in second home hotspots where owners will be keen to have the flexibility to let their property out for more than 90 days.”

He added: “But the extent to which it ensures homes become more affordable to local buyers will still be heavily dependent on levels of new housing delivery, that will be crucial to re-balancing supply and demand in these markets.”

Marc von Grundherr, director of London estate agent Benham and Reeves, said reducing the level of short-term lets available poses a risk to the local economy. 

He said: “Reducing the level of short-term lets available could not only hurt the local economy due to a reduction in tourism footfall, but it will also ramp up the short-term rental values for the homes that are available, which could also deter holidaymakers from visiting.”

Grudherr said: “It’s fair to say that this latest announcement is a somewhat ironic one, given that the government are the ones to blame for a rise in short-term lets in the first place. 

“Having waged war against landlords by reducing buy-to-let profitability via a string of legislative changes in recent years, they have inadvertently fuelled the boom in the short-term lets.”

He added: “Realising the error of their ways, they are now attempting to rectify it, but in doing so, they could cause more harm than good.”

“While many local residents may struggle with housing affordability, particularly in popular tourist destinations, it’s important to remember that tourism forms the backbone of these local economies.”

The DLHC have been contacted for a response.