Short Term Thinking

DLUHC published a consultation paper on 13 April 2023 setting out its proposal to create a new use class,  “C5 Short Term Let“,  to cover short term lets, and on related proposals to introduce new permitted development rights. So there will be a distinction between use classes C3  and C5. The Government will at the same time introduce permitted development rights into the General Permitted Development Order to allow changes from C3 to C5 and vice versa without the need for planning permission, unless the relevant local planning authority disapplies one or both of the permitted development rights by way of an article 4 direction.

It is vital that all those engaged in relevant businesses understand what is proposed, for instance serviced apartment operators; Airbnb type businesses and individual hosts, and build to rent businesses where there is a short-term letting element. There are opportunities, but also risks.

The tl:dr appears to be that in principle any flat or house in England (outside London) would be able to be used for Airbnb style short-term accommodation up to 365 days a year without the need for planning permission unless the local planning authority makes, with the necessary justification, an article 4 direction.

But it is all a bit confusing! At least, a number of us at Town Legal have been scratching our heads. Thanks incidentally to my colleague Aline Hyde for much work on this today – and for some of the text which follows.

 I think some of the confusion is down to the way that the proposal is trying to be all things to all people. The press statement is headed:

“New holiday let rules to protect local people and support tourism

New proposals will introduce a requirement for planning permissions for short term lets in tourist hot spots”

It explains:

“The government has listened to calls from local people in tourist hotspots that they are priced out of homes to rent or to buy and need housing that is more affordable so they can continue to work and live in the place they call home. The proposed planning changes would support sustainable communities, supporting local people and businesses and local services.

The proposed planning changes would see a planning use class created for short term lets not used as a sole or main home, alongside new permitted development rights, which will mean planning permission is not needed in areas where local authorities choose not to use these planning controls.

Both of these measures are focussed on short term lets, and therefore the planning changes and the register will not impact on hotels, hostels or B&Bs.”

On the face of it then, the Government is both seeking to regulate use of residential properties as short-term, Airbnb type accommodation but also to liberalise the use of residential properties for that purpose. Hmm.

First word of warning: this is not just about “tourist hot spots”. Subject to the ability for local authorities to make article 4 directions (more below), the proposals cover the whole of England.

Second word of warning: can we first be clear as to what exactly is a “short term let”? The consultation paper states:

“The term “short term let” can encompass a range of activity associated with a dwelling. Some short term lets may be let out for a limited period while the owner themselves go on holiday. Others may be properties that provide for a series of lets for holidays etc or very short term overnight sleeping accommodation including renting an individual bedroom while the owners are in situ.“

So DLUHC envisages the term as covering situations:

• where a property is let for a limited period whilst the owner is away
• where the owner remains in situ and rents out an individual bedroom on a short-term basis (NB not longer term lodgers are excluded) or
• where a property provides for a series of lets to holidaymakers.

However, its proposed wording for the new “short term let” C5 is as follows:

“Use of a dwellinghouse that is not a sole or main residence for temporary sleeping accommodation for the purpose of holiday, leisure, recreation, business or other travel.”

Nothing about short-term lets beyond the title itself. Nothing about the letting out of individual bedrooms on a short-term basis whilst the owner remains in residence , which appears to be unrestricted by the proposals. And why list those purposes except perhaps so that the list excludes reference to asylum…?

The anachronistic word “dwellinghouse” beloved of planning lawyers can confuse as well. It just means “dwelling” and so includes flats as well as houses.

How will it be determined whether a property falls within use class C5? The consultation document explains that at the time of commencement of the proposed secondary legislation, properties used for this purpose will automatically fall within use class C5 and that there will therefore be no need to apply for planning permission, though of course an application for a lawful development certificate may be advisable if there is any uncertainty. Thereafter, where there is no article 4 direction disapplying the permitted development right to switch between C3 and C5, the Government intends to require that the local planning authority is notified by the developer when a change of use occurs, but it does not propose that there be a requirement to seek prior approval. There will be no site size limits and no constraint-based exclusions.

DLUHC suggests that, where there is a local problem with the number of short term lets, one or both of these permitted development rights could be removed by way of an Article 4 direction. It is clearly anticipated that most areas will wish to retain the right allowing for change of use from short term let to dwellinghouse, even if they remove the opposing right. The consultation confirms that the policy tests for making an Article 4 direction, to be found within paragraph 53 of the NPPF, will not be amended and so an authority hoping to make one will need to be based on robust evidence and apply to the smallest geographical area possible.

Properties which fall within use class C5 will benefit from the permitted development rights which currently apply to the curtilage of a dwellinghouse such as rear and upward extensions, alterations to the roof, porches and outbuildings.  

Another proposal the subject of consultation is for a limit on the number of nights for which a property within use class C3 and is a sole or main dwellinghouse may be let without there being a material change of use. DLUHC tells us it is open to suggestions as to how many nights this should be, but it will apparently only consider numbers divisible by 30 – listing 30, 60 and 90 as potential options. Two legal mechanisms for achieving this are proposed: the first is to create a new permitted development right allowing for the use of the C3 dwellinghouse for temporary sleeping accommodation for a fixed number of nights per year, the benefit of this being that the right could be removed by Article 4 direction. The second and alternative means is by incorporating the limitation on the number of nights into the wording of use class C3 itself.

DLUHC appears to be trying to be helpful by proposing a specific number of nights for which a property may be let, within which it says a material change of use will not have occurred. There is an obvious attraction to giving homeowners certainty that they may do this without planning consequence. Trying to achieve it in this way, however, reveals what must be a basic misunderstanding as to the law relating to material change of use. Supposing that the Government eventually settles on a limit of 30 days: it is not necessarily the case that the use of a dwellinghouse for short term let for, say 31 or 35 (or any other number of) days, will result in a material change of use. A change of use is only development if it is material, and materiality is assessed with reference to a range of factors which are often site- or proposal-specific. To make the use of a dwellinghouse as a short term let for 31 or 35 days a material change of use, would need specific legislative provision, absent which subjective judgments will remain determinative.  

This has already been done in respect of properties in London, which can already be let for up to 90 days per year. Beyond 90 days, an application for permission to make a material change of use is required and the consultation confirms that this provision will be unaffected by the changes proposed within this consultation. One infers that DLUHC haven’t simply mirrored this approach across the country so that individual local planning authorities may elect to remove the permitted development right to let a main residence for the limited number of nights if they consider it necessary to do so.

Of course, the ability to use a dwellinghouse as a short term let is subject to the planning conditions and obligations which affect the site, and might be separately restricted, for example by way of covenants in a lease. Whether the changes proposed in the consultation affect the operation of existing planning conditions or obligations may depend on their specific wording.

So, stepping back for a moment, how is all this really going to work? So much is going to come down to the extent to which local planning authorities introduce article 4 directions removing the proposed permitted development right to go from C3 to C5 and indeed the Government intervenes (as it has in the past ) to restrict the scope of directions which it considers to be too wide or unjustified.

If there is no article 4 direction in an area, C3 properties will be able to be used for C5 short term let use without the need for planning permission – liberalising the current position where more than ancillary short-term accommodation use (more than 90 days of that use in London – a restriction which would remain) would amount to a material change of use. In such areas, use of properties in Airbnb type use could be maximised.

The onus is going to be on local planning authorities to do the work and justify appropriate article 4 directions.

There is a separate but related consultation currently underway on a registration scheme for short term lets, led by the Department for Culture, Media and Sport. Having conducted a recent call for evidence, it considers that a registration scheme is necessary to enable local authorities to effectively police the limit on the number of nights.

I wrote a blog post Time To Review The “C” Use Classes? back on 1 July 2016. It is obvious that a more comprehensive review is needed than what is currently proposed.

Simon Ricketts, 14 April 2023

Personal views, et cetera

Sinclair C5, courtesy wikipedia