Changes in UK Law for Landlords Offering Short-Term Lets

UK property investment has become increasingly popular in recent years, with many landlords choosing to offer their property as short-term lets for bigger income in combat against mortgage interest rates. However, the UK government have implemented a range of changes in law for landlords offering short-term lets. In this blog post, we will explore these changes and discuss the impact they may have on UK property investment and short-term let property.

Overview of short-term lets and their popularity in the UK

Short-term lets have become increasingly popular in the UK over recent years, particularly with the rise of Airbnb and other similar platforms. This type of accommodation allows landlords to rent out their property for short periods, typically for a few nights or weeks.

There are various reasons why short-term lets have become popular. For landlords, it provides an opportunity to earn more money than with traditional long-term lets. For travellers, it offers a more affordable and flexible alternative to hotels. It also provides a chance to stay in unique and unusual properties that would not typically be available through traditional accommodation providers.

However, the popularity of short-term lets has raised concerns about the impact on local communities and the wider rental market. For example, some have argued that short-term lets can contribute to rising property prices and reduced availability of affordable long-term rental properties.

As a result, new laws and regulations have been introduced to address some of these concerns, with certain areas requiring landlords to obtain licenses before offering short-term lets. Let's take a closer look at some of these changes and what they mean for landlords offering short-term lets in the UK.

New laws for landlords to be aware of when operating short-term lets

If you are a landlord operating short-term lets in the UK, it is important to stay up-to-date with any new laws that may affect your property. Here are a few recent changes that landlords should be aware of:

1. Planning Permission/licensing:

From March 2019, short-term lets are considered a material change of use, meaning landlords must apply for planning permission to use their property for this purpose. Planning permission costs and procedures vary depending on the local authority. Additionally, certain areas such as Edinburgh, have restrictions in place to prevent the use of residential properties for short-term lets.

2. Safety Regulations:

In January 2020, the UK government introduced new regulations that require landlords to provide basic safety standards in their short-term let properties. This includes providing working smoke and carbon monoxide alarms and making sure the electrical installations are safe. Failure to comply can result in fines of up to £30,000.

From April 2020, all income received from short-term lets must be declared to HMRC and will be subject to income tax. Additionally, if a property is rented out for more than 140 days a year, landlords will have to pay business rates rather than council tax. Failure to comply can result in fines and penalties.

4. Tenant Fees:

As of June 2019, tenant fees are banned in the UK, meaning landlords cannot charge fees for things like referencing, credit checks, or inventory. Landlords can still charge a holding deposit, which is usually equivalent to one week's rent, but this is capped at a maximum of five weeks' rent for tenancies with an annual rent below £50,000.

Possible Future Expansion of Licensing

Currently, licenses for short-term lets are only required in certain areas of the UK. However, there is a possibility that this requirement could be expanded in the future.

Some local authorities have already begun to push for mandatory licenses for short-term lets throughout their areas, citing concerns about safety, noise, and disruption to local communities. In addition, there have been calls for greater regulation of the short-term rental market, with some industry experts arguing that it should be subject to the same regulations as the traditional hotel sector.

If licenses are rolled out across the country, landlords offering short-term lets will need to ensure that they comply with the regulations in their local area. Failure to obtain the necessary license could result in hefty fines or legal action.

As with any legal changes, landlords need to stay informed and up-to-date on developments in the short-term let market. By staying abreast of any new regulations or requirements, landlords can ensure that they are operating within the law and providing a safe and enjoyable experience for their guests.

Impact of COVID-19 on Short-term let regulations and the Future of the Industry

The COVID-19 pandemic has had a significant impact on the short-term let industry in the UK. As the virus spread, governments around the world introduced travel restrictions and lockdown measures, leading to a decrease in demand for short-term accommodation.

In response to this, some landlords who previously operated short-term lets have shifted to long-term rentals to avoid financial losses. This shift has put additional pressure on the already-strained long-term rental market.

However, the pandemic has also created new opportunities for short-term let landlords. For example, some landlords have been able to provide accommodation for key workers, who require temporary accommodation near their workplaces.

Insurance Requirements for Short-Term Lets

Landlords offering short-term lets should ensure they have appropriate insurance coverage in place. Regular landlord insurance policies may not cover short-term lets, so it's important to speak with your insurance provider and obtain the necessary coverage.

One important type of insurance to consider is public liability insurance. This will protect you in the event of a claim for injury or damage to a third party while they are on your property. It's important to note that many short-term letting platforms, such as Airbnb, offer their insurance policies, but these may not cover all situations, so it's best to obtain additional coverage as needed.

Additionally, it's important to make sure your property is adequately insured against damage or theft caused by guests. Many insurance providers may offer specific policies for short-term lets to cover these situations.

Before offering a short-term let, it's important to thoroughly research and understand the insurance requirements and coverage options available. Taking the time to obtain proper insurance coverage can protect both you and your guests in the event of an unforeseen situation.

Other Rules and Regulations for Landlords Offering Short-Term Lets

Aside from obtaining a license for short-term lets in certain areas, there are also other rules and regulations that landlords should be aware of when offering this type of accommodation.

One of the most important aspects of short-term lets is ensuring that the property is safe and meets all necessary health and safety regulations. This includes providing working smoke alarms and carbon monoxide detectors, ensuring electrical appliances are safe, and maintaining proper fire exits.

Landlords must also adhere to all anti-discrimination laws and must not discriminate against tenants based on factors such as race, religion, gender, or sexual orientation.

Additionally, it is important to have clear communication with tenants or the management team regarding the terms of the let, including check-in and check-out procedures, rules for guests, and any specific instructions for the property.

It is also recommended that landlords or management conduct thorough background checks on potential tenants and obtain references from previous landlords to ensure that they are trustworthy and reliable.

Lastly, landlords should keep detailed records of all transactions and correspondence related to the short-term let, including receipts and agreements, in case any disputes arise.

By staying up-to-date with all applicable laws and regulations and maintaining clear communication with tenants, landlords can offer safe and comfortable short-term lets while avoiding any potential legal issues.

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Serviced Accommodation Strategy Link

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