Tempted to ‘short let’?

6 January, 2017
by: Cripps Pemberton Greenish

Whether it’s a property that you rarely use or a room in the flat where you live, the attractions of “Air-BnB-style” short-term letting are clear.

 

In London, there have for many years been specific Local Authority controls on residential properties being rented out for less than 90 days. The reason is so as to ensure that – even when rented out – flats and houses are available as permanent residential accommodation, for people living and working in London. That is generally understood as meaning for periods of more than 90 days although, in practice, it will normally be at least 6 months (rentals being on an assured shorthold tenancy).

 

It’s understandable that property owners are tempted by the considerably higher rates achievable for nightly or weekly rentals. Even if the property is regularly empty for a few days or more, short-term occupiers may still be more profitable than renting to people living in London and so who are permanent occupiers. Money aside, it may be a “lifestyle choice” of the landlord for a multiplicity of reasons.

 

However, there are several hurdles you may need to clear before going ahead with this sort of operation. These include obtaining the consent of any mortgagee and/or landlord and/or freeholder – and the implications for insurance policies.

 

Also to be borne in mind are the restrictions on short term letting which apply only in London. Despite much media interest last year in these provisions of the Deregulation Act, short term letting is far from being a deregulated area.

 

An exemption from those restrictions on short-letting (i.e. renting out for periods of less than 90 days) applies where, in brief, the property is
1. Occupied on a short-let basis for no more than 90 days in total during a calendar year, and
2. the person who provides the accommodation is liable for Council Tax.

 

If you “short let” within the parameters of the Deregulation Act exemption, that will not be in breach of planning control.

 

However, the 90 days allowance might be used up in the summer alone. You may well think, “Who’s going to know anyway?” – and indeed the likelihood of you having problems with your local Council will depend on where your property is, how considerate your short-term occupiers are, whether you get on with your neighbours etc …

 

It used to be that only Westminster City Council seemed seriously concerned about Short Term Letting; it had a dedicated team of Enforcement officers and a regular blitz on problem areas. In recent years though, it has become topical also in Kensington & Chelsea, Hammersmith & Fulham … and even Tower Hamlets.

 

Points to bear in mind –
• Council Enforcement teams are stretched, so they tend to be reactive rather than proactive. If no one complains, they are unlikely to investigate whether a property is being used for unauthorised short term letting.
• Once Enforcement are alerted, a simple Google search can provide useful evidence for them to use against you.
• A London borough can apply for the Deregulation Act exemption to be dis-applied in parts of its borough. (Such an application was made for parts of Westminster.)
• Enforcement officers download ownership information from the Land Registry. They routinely write to mortgagees, long leaseholders and freeholders. If the letting is a breach of the mortgage conditions, alerting the mortgagee can be very effective from the Council’s standpoint.
• Council Enforcement officers usually send at least one Warning letter before moving to formal Enforcement action
If you receive a Planning Contravention Notice (“PCN”), you should consider seeking legal advice. A PCN usually has a long list of probing questions which it will be hard to answer without providing ammunition for the Council – but it is an offence not to respond to the PCN.
• If an Enforcement Notice is served, you have the right of Appeal – and that suspends the Notice. However, a review of planning appeals in relation to Short Term Letting suggests that the prospects of a successful Appeal (and so securing planning permission for the short-term letting) are very slim.
• Once an Enforcement Notice has been served, that is likely to remain on the Local Land Charges Register. It will prompt enquiries if you look to sell or re-mortgage.
• Short-term letting in beach of an Enforcement Notice which has come into effect (whether in the absence of an Appeal or following dismissal of an Appeal) is a criminal offence.

 

So is short-term letting “An easy and hassle free way for you to make some extra money while your flat is vacant”?

 

Well, that’s how you may see it being marketed to prospective landlords. It’s certainly not hurdle-free though, with preparation being key to minimising the potential hassles.