New Rules for Holiday Lets in the UK and What to do Next

The UK’s vacation rental landscape is gearing up for a significant regulatory makeover that could reshape how holiday lets operate across the country. Merilee Karr, former chairperson of the Short-term Rental Accommodation Association (STAA) and CEO of Under the Doormat Group, offers invaluable insights into the proposed new rules for holiday lets. Here’s an in-depth look at the expected changes and what they mean for your business.

Watch our video interview with Merilee Karr for an in-depth discussion on the proposed impact of the UK short term rental regulations and how you can be better prepared.

Also see our article How to get around STR regulations – a cautionary tale.

The proposed new regulations have two components – the creation of a mandatory national register and changes in planning permission for vacation rentals.

Understanding the new STR registration system

Central to the new rules for holiday lets is the introduction of a national registration system to provide local authorities with information on short-term lets in their area and, in theory, enable them to monitor their use, the impact on the local area and whether health and safety rules are being met.

“This is something that’s been on the table actually for many years,” says Merilee.

The industry also wants registration but under certain conditions, she adds.

“We support a single national registration system that is accessible, low-cost or free, avoiding a patchwork of local regulations. It needs to be a declaratory system, meaning you declare what you’re doing and get a registration number, not a bureaucratic process. For us, It’s about transparency and leveraging data to dispel myths about the impact of short-term lets on local communities or the housing market.”

According to Merilee, the direction of this aspect of the proposed regulations is promising, although it is not clear exactly what final system will look like. The outcome of the next elections in the UK could also have an impact, so the real question is whether this registration system will be legislated prior to the UK elections or not, she adds.

Changes in planning permission for holiday lets and holiday let planning permission are also on the horizon. “Planning is a lot trickier,” says Merilee.

This aspect of the proposed regulations essentially involves creating a new planning class for short-term rentals and Article 4 directions would give a local authority permission to restrict the number of short-term rentals in a particular area. There would also be permitted development rights where people would move between planning classes – e.g. between a residential planning class and for example, a short-term rental planning class.”

Merilee cautions that planning regulations can be a “blunt mechanism” and says she is not an advocate for planning as a solution to drive the right regulatory outcomes. If planning regulations were to be implemented, her hope was that Article 4 directions would be evidence-based using a registration system.

“We don’t want politicians using this as a political tool to crack down on the industry without data-based evidence behind decisions. We’ve seen what happened in Scotland where local councils use a very hard hammer. And we see the negative impact that that has on tourism to Scotland. I don’t want that to happen for other parts of the UK. My hope is the government realises planning is a sledgehammer to crack a nut.”

Across the world, political parties recognise that housing wins votes, says Merilee. And therefore, they look for ways to show the electorate they take housing seriously and help people get onto the housing ladder.

“For us as an industry, the key is how we demonstrate our responsible growth and how we ensure with better data from registration, etc, that we can debunk the myths and demonstrate the value our sector brings to the economy. The challenge is even though politicians may recognise the real problem is that not enough homes are being built, it’s much easier to crack down on short-term rentals than to build much-needed, affordable new homes. So it is a dilemma that’s not going to go away.”

Timing of new rules for holiday lets

“It is likely that registration might come ahead of planning in the legislative agenda, but how these things materialise in the coming months, is anyone’s guess,” says Merilee.

The goal of STAA is to continue to be involved in the discussions.

Tackling the Airbnb 90 day rule

The airbnb 90 day rule, which limits the number of days a property can be rented out, is a hot topic in urban areas like London. Merilee didn’t delve into the specifics of the rule but suggested that comprehensive data collection through the registration system could inform any future decisions on the extension of such restrictions.

How will the changes affect your vacation rental business?

Although initially not much may change, over time, in areas where there is a housing crisis and a demonstrable large portion of short term rentals, authorities may use Article 4 directions to restrict future growth.

Merilee touches on the concept of grandfathering within the holiday cottage planning permission discussion, which means existing businesses would be excluded from new planning rules. This is important for operators to understand as they prepare for potential holiday let planning restrictions.

Advocacy: The key to influencing STR laws

In a dynamic political climate, engaging with MPs and industry associations is crucial. “Once the new rules for holiday lets come into parliament, there’s a very short timeframe to do anything to influence anything,” Merilee urges.

The next step, is to make sure you are a member of the STAA and to get updates about what’s happening. Get involved and speak to your MPs before it’s too late, she says.

“We should all work really hard, not just at a national level, at the association level, but also in our local jurisdictions to make sure our MPs understand the value our sector brings, and that when this legislation comes, they know what the right choices are to make.”

What is the future of short-term lets in the UK?

The holiday let regulations UK are a work in progress, but regulation is not the reason to launch in the market or not launch in the market today, says Merilee.

“There are broader market factors which make it a less attractive market to be a brand new entrant than several years ago. But it depends if you’re an individual host looking to rent out your property. It’s not a bad time to do that if you have the right property in the right location and you’re able to provide the right services. It depends on what size, what order of magnitude and what you’re trying to achieve.”

Rather than just setting up something brand new, you might also want to explore other market opportunities such as partnering or getting involved in businesses that already exist, she advises.

What about European STR laws?

The biggest positive move forward, according to Merilee, is the creation of a Europe-wide regulatory environment with the involvement of the European Commission, which involves registration and data sharing. This could be a strong framework to avoid cities cracking down on STR rentals with heavy-handed regulations without evidence.

“Having a European framework would be a massive step forward for us as an industry and hopefully serve as an example to other markets on how you get the balance right.”

How to get ahead of the new rules for holiday lets in the UK as an industry

If we take the lead and we help governments access information we have in our systems and are transparent as a sector, it puts us in a much stronger position to avoid the inevitable crackdown when growth in the sector leads to discontent, she says.

“We have the solutions as an industry and what I’d like to see is that we get ahead of regulators by supporting them to have the right frameworks so they don’t need to use over-regulation when, in their view, things get out of control.”

The takeaway

As these new rules for holiday lets in the UK take shape, staying informed is paramount. For those wondering “Do you need planning permission for Airbnb?” or how the 90 day rule airbnb will evolve, Merilee Karr’s insights are a clear call to remain vigilant and proactive. With thoughtful engagement and strategy, the vacation rental industry can navigate these changes and continue to thrive.