How New UK Rules Will Reshape Airbnb

Investment

The UK government has recently introduced strict new regulations for Airbnb and other short-term letting platforms, aiming to address the challenges these rentals present for housing availability and local communities. Here’s a breakdown of the changes and what they mean for property owners, renters, and investors in the UK property market.

Introduction to the New Regulations

Airbnb has transformed how people approach short-term stays, offering both flexibility for travellers and extra income for property owners. However, this has led to unintended challenges. Many areas, particularly in sought-after holiday regions, have seen housing scarcity as an increasing number of properties are converted into holiday rentals. In response, the UK government aims to “take back control” of local housing through two primary measures: a mandatory national register for short-term lets and a requirement for planning permission on non-primary residence rentals beyond 90 nights annually.

This legislative shift is meant to curb the rapid growth of short-term lets that “hollow out” communities by reducing the housing available for local residents, as emphasised by Michael Gove, Secretary of State for Levelling Up, Housing, and Communities. The government hopes to balance tourism benefits with the availability of affordable housing for locals, aiming to create “a fair and functional housing market that meets the needs of communities” across the UK.

Mandatory National Register for Short-Term Lets

One of the most significant components of the new rules is the establishment of a mandatory national register for short-term lets. Property owners offering short-term rentals will now be required to list their properties in this registry, allowing local authorities to keep better track of rental activities. The registry aims to help councils monitor housing usage and ensure compliance with safety and health standards, providing essential data to evaluate the impact of short-term lets on their communities.

The register isn’t simply a monitoring tool—it also provides an essential means to address health and safety concerns in these short-term rental properties. Additionally, it will be instrumental in enforcing the 90-night rule, which limits short-term rentals of non-primary residences to prevent excessive turnover and noise that can disrupt residential neighbourhoods. Amanda Cupples, General Manager for Northern Europe at Airbnb, supports this approach, saying it provides a “clear framework” that helps ensure sustainable short-term letting and keeps communities healthy.

Planning Permission Requirement and New Use Class

In addition to the national register, the UK government has introduced a planning permission requirement for properties used solely as short-term rentals. A new “use class” for short-term lets will categorise such properties differently from regular residential housing. By requiring this planning permission, local authorities gain the power to limit short-term rental expansions, which could help preserve residential character in specific areas while still allowing flexibility for homeowners.

The changes aren’t expected to impact all holiday lets. For instance, individuals renting out their primary homes occasionally, up to 90 days per year, are exempt from this requirement. However, properties used exclusively for short-term lets will need to obtain planning permission to continue operating legally. This will affect areas heavily populated by holiday rentals, such as Cornwall, Brighton, and parts of London, where rental properties have often outpaced regular housing.

The government has also introduced associated development rights, which make it easier for properties to transition between short-term lets and residential uses. For example, a homeowner can convert their property from a rental back to a standard residence without going through a complicated process. This new flexibility allows local councils to reverse development rights as they see fit, depending on community needs.

Impact on Local Communities and Housing Market

With these reforms, the government is looking to combat the “hollowing out” effect caused by high concentrations of short-term lets in residential areas, where tourists displace local residents and drive up rents. In tourist-heavy areas, the boom in short-term lets has created housing scarcity, making it difficult for local people to find affordable homes. The lack of available properties, coupled with inflated prices, has led to increased difficulty for local families, students, and workers trying to stay within their communities.

Michael Gove pointed out that these new measures aim to put power back into the hands of local councils, allowing communities to make decisions that keep housing accessible for residents. The policy is part of the government’s long-term housing plan, which includes building more affordable housing and controlling development patterns to prevent price surges driven by holiday rentals.

While these changes are intended to benefit communities, they’re not without impact on the short-term rental market. Some hosts have voiced concerns about reduced flexibility, particularly in high-tourism regions, where seasonal demand for short-term stays is a major income source. For these hosts, the new rules could mean stricter oversight and potentially lower revenues. However, others see this as a necessary step to curb excessive property prices in prime tourist spots and prioritise local housing availability.

Opportunities for Property Investors

Despite the stricter regulations, the changes also open up new opportunities for investors in the UK property market. With limits on short-term lets, long-term rentals may regain appeal, offering more stability for property investors who have found themselves caught in the ebb and flow of short-term rental market changes. By choosing to invest in areas with a clear demand for residential housing, investors can cater to the market need for long-term tenancies and potentially benefit from reduced regulatory burdens.

Moreover, with the planning permission system in place, investing in short-term lets may become more viable in locations where local councils actively support tourism and holiday accommodation, providing stable revenue streams. As local authorities gain more control, some areas may encourage short-term lets to support tourism while others restrict them to address housing shortages. This development means investors will need to research local regulations carefully, aligning their investment strategy with the planning permissions and community goals in specific areas.

FJP Investment CEO Jamie Johnson highlighted the potential for positive outcomes, stating, “A balanced approach could allow for sustainable tourism that bolsters local economies while still respecting the housing needs of full-time residents.” This reflects an emerging perspective among property investors who recognise the importance of contributing to community stability alongside achieving investment returns.

Conclusion

The new UK regulations for short-term lets represent a significant shift in the property market, targeting the balance between tourism needs and housing availability. By introducing a mandatory national register and imposing planning permissions for non-primary residence short-term rentals, the government aims to curb the growth of holiday lets that have priced out local residents. While this creates new challenges for property owners who rely on short-term rental income, it also presents opportunities for investors to explore long-term rental properties or regulated short-term lets in regions supportive of tourism.

Ultimately, these changes may help restore balance to the housing market, allowing residents to stay in their communities while accommodating visitors in a sustainable way. For those in the property market, understanding and adapting to these rules will be key to navigating the evolving landscape of UK housing and investment.