Since Airbnb introduced their revolutionary platform, where anyone could make supplementary income from a spare room or empty apartment, the marketplace changed how it was to operate forever. The online short-term letting platform changed the way landlords—or hosts, as they were to be rebranded—advertise and occupy properties, with the minimum of fuss and simple, smaller fees. Rental periods for full properties, typically months or weeks, suddenly became inundated with lets of only a few days. The way tenants—rebranded to guests—started to find somewhere to stay for their short-breaks and getaways, changed indefinitely.
So, what is a short-term let?
A short-term let is generally considered a residential stay of a few days to a few months. Lets over 3 months are, for the most part, considered a mid- or medium-term let. Those over 6 and 12 months are considered long-term. Long-term lets are generally unfurnished, and the tenant becomes responsible for all utilities and council tax, but that’s not set in stone. There are rental options to cover every eventuality. It depends on what works for the landlord and the demands of their tenants.
The London 90-day rule
The magic number is 90 in London. That’s the number of days a London host can let their entire property each year without holding the correct planning permission. If you exceed the 90-day limit, whether the period is for a couple of bookings or a substantial number of them, you’re going to need a change in planning permission to satisfy the regulators.
Applying for the change in planning permission
To apply for the change in planning, it’s as simple as getting in touch with your local council. This is known as Temporary Sleeping Accommodation planning permission. You need to apply online through the government site, and the process begins by selecting your borough. Each borough has its own procedure, but you will be asked to supply, at a minimum, a flood risk assessment, land registry documents and a fee of around £400.
Your application could take up to 2 months to be approved and processed.
Problems you might face when applying for planning permission
If you're looking into making a change in planning permission, there are several areas where the authorities will consider it against the flow of the neighbourhood or property. For example, when an apartment is located in a predominantly residential area or building, then a high turnover of visitors to the area can impact the sense of community. Any threat of crime or disturbance to the other residents will be considered an infringement and is likely to affect the application. That same steady flow of new guests will also have an impact on the community’s typical practices: security, waste disposal, noise and acceptable behaviour. Any of these can cause disruption and would be considered a poor choice for a change in planning. The above are all items that feature in the current City of London Local Plan, as well as the longer-term future proposal City Plan 2036. Introduced to manage the strategy and development of the city, the document includes an outline of how planning decisions will be made. If you’re thinking of applying for planning permission change in London, you’d be advised to give both of these a thorough read.
Who are the new wave of guests taking advantage of short-term lets?
There are plenty of takers for a short- or medium-term let. That’s great news for landlords aiming to take advantage of the higher prices they can achieve over those of their safer, steadier long-term tenants—but only if they can fill the properties without any shortfalls or gaps in their calendars. And guaranteeing high-occupancy rates can be quite the challenge for the individual operator. Once upon a time, the short-term let was predominantly the home-from-home for tourists and leisure seekers. And now? The world is becoming, relatively speaking, smaller each day. It’s a world more widely explored and enjoyed than ever by everyone from interns to executives. The short-term let has gathered much momentum, and the trusty B&B and hotel room have taken quite a pounding.
So, who are these modern short-term renters?
· Business contractors and consultants, involved with temporary projects, conferences and training courses.
· Students on short courses, exchange programs and language study schemes.
· Work placements for candidates, company executives and young professionals.
· Fun seekers visiting festivals and sports tournaments, as well as the event participants.
All of these are in addition to the typical holiday and short-break visitor, wedding guest or celebration reveller.
There’s no problem for room-to-rent participants
The short-term let regulation only applies to those letting out the entire property—whether that’s a flat, apartment or house. For those who remain, living in the property during a guest’s stay, there is no limit to the number of days each year or amount of rooms they are permitted to let. Hosts may need the permission of their landlord if they’re not the homeowners, their mortgage provider if they are, and the correct type and amount of insurance coverage. It can also impact the amount of council tax they pay if they currently claim a discount or an exemption.
What happens if I go over the 90-day limit?
It’s ok. Don’t panic. If you’ve spotted that you’re heading towards the 90-day limit, then you’ve still got time to get hold of your planning permission. If you’ve reached your 90-day limit, a planning application can take several weeks to 2 months to be processed. It’s far better to be organised if you don’t want to suffer any loss of income. The term runs by each calendar year—1 January to 31 December. If you’re new to short-term letting and aren’t sure how it’s going to go, estimate how much of the calendar you’ve got left to fill. Then create a reminder for next year if you think you’re likely to exceed the 90 days in a full year of operation.
Airbnb will put a stop to your rentals
In January 2017, Airbnb included a new counter to keep track of their customers’ rentals. Anyone reaching the 90-day limit will close their calendar automatically for the rest of the year. To reactivate the calendar, they must submit an exemption form confirming they hold the appropriate planning permission. The calendar for the following year will remain active; the 90-day rule runs year-to-year after all.
What happens if I don’t apply for short-term rental permission?
Whenever anyone exceeds the 90-day limit, it’s considered a breach of planning permission. The unauthorised change of use carries fines of up to £20k, so you really shouldn’t take matters lightly. You may also be fined for failing to pay the correct amount of Council Tax if you are paying anything less than the full rate for your property.
How to side-step the 90-day rule in London
You’ll find an abundance of websites telling you how to avoid having to apply for the planning permission consent. Many of these are less than scrupulous and will leave you at risk of the £20k fine available for breaking the rules. However, one way to get past the red tape is to mix long-term and mid-term lets with your short-term lettings.
Mixing it up with long- and mid-term lets
A mid-term let is a single stay of over 3 months. A forward-thinking host or property management specialist such as UpperKey will manage their property to fill it for the maximum rates during the busiest periods to make the most of the 90-day allowance. For the rest of the year, the property is occupied utilising mid- and long-term lets using longer rental based websites such as Zoopla or Rightmove to find their tenants.
Your short-term let checklist
It’s important not to enter into any form of property letting without thorough investigation.
The popular advertising platforms provide an opportunity to create a rental agreement, but not everything you incorporate in them is enforceable by law. Looking into the legal rights for hosts and guests alike should be high on your to-do list.
Here are a few of the items that you should be considering when looking into letting a property for any duration in London:
The Regulatory Reform (Fire Safety) Order 2005 makes landlords/hosts responsible for providing adequate fire protection for the premises. You must carry out a fire risk assessment and keep it up to date.
Landlords/hosts must have their properties inspected each year. The inspection must be carried out by a Gas Safe Registered engineer who will provide the landlord with a safety certificate. Your certificate must be displayed for lets of less than 28 days, and a copy supplied to tenants for periods longer than that.
All wiring and appliances must be safe to use by all residents. Your electrical appliances should also be regularly PAT tested.
Holding the correct permission to carry out short-term lets
You may need permission from your mortgage provider, landlord or the freeholder of the property if you’re planning to offer short-term lets. Any change of usage may invalidate your insurance policy, and also the local authorities may have unique specific regulations with which you must comply. Research all areas thoroughly. You wouldn’t want to miss any small detail that could turn out to be a costly mistake.
Paying the correct taxes
The profit from your short-term let business is liable for income tax. Make sure you understand the HMRC rules. You must be confident that you’re paying the correct amount, and not breaking the law regarding any additional income. Failing to pay the correct amount of income tax can result in heavy fines and backdated taxes.
Why not leave all the hard work to the professionals?
Making a profit from short-term lets in London can create an incredible amount of hard work. You’ll have to learn the legalities of the system, meet and greet your guests for check-ins and departures, make sure the apartment is cleaned and ready for new arrivals, organise marketing and make sure you have tenants for as much of the year as possible.
Let UpperKey take care of every last, little detail
By engaging with our incredible property management service, you don’t have to lift a finger. We do all the hard work, and on top of that, we guarantee you rent for every week of your contract. Contact us today to start reaping the benefits.