Holiday-lets – impact of altering planning laws

Michael Gove, housing secretary, has announced that ministers intend to alter planning laws by the end of the year, which would give councils the power to ban future holiday-lets if their local area does not have enough affordable housing to rent or buy.

The government is also intending to open a consultation on creating a new mandatory registration scheme for holiday-lets; this would allow councils to see how much local housing stock is taken up by temporary lets.

While this move will likely appease concerns among residents in holiday hotspots, landlords may feel this marks yet another blow for the buy-to-let market.

Roxana Mohammadian-Molina (pictured), chief strategy officer at Blend Network, said whether this is a good or a bad idea depends on who you are, a second-home landlord or a member of the local community impacted by holiday-lets.

Altering planning laws

“Overall, while I can see the point of a proposal that intends to stop communities being eroded because of a scarcity of affordable homes to buy, or to rent long-term, I believe there are two sides to the story,” Mohammadian-Molina said.

Mohammadian-Molina said tourist hotspots such as coastal towns in Cornwall and Devon are being swamped by tourists and not enough social housing.

For example, she said Cornwall has 12,776 second homes and more than 11,000 holiday lets, while 21,817 people are on its housing register.

“That is a grim statistic, but at the end of the day, if 21,817 people are on the housing register in Cornwall, all the Cornish government needs to do is build more social and affordable homes instead of blaming it on second homeowners,” Mohammadian-Molina said. She believes many communities are trying to hide their failure in meeting their homebuilding targets behind the holiday-let figures.

Overall, she supports measures to find a balance between business and local housing needs, but fears a blanket ban or even a restriction on holiday-lets may not be the solution we are looking for.

“Instead, I would favour another government proposal which could allow council tax to be doubled on second homes and holiday-lets to alleviate problems caused by a high concentration of second homes and holiday-lets on the broads and in coastal areas,” Mohammadian-Molina said.

Rising rental prices

Mohammadian-Molina said if restrictions do come into play on holiday-lets and therefore supply declines in hotspots, then she expects rental prices to rise in those areas.

“This proposal could result in increased rental prices for holiday-lets if supply declines in such hotspots, but, more importantly, a blanket ban or restriction on holiday-lets may stress other areas - such as employment and wage levels,” Mohammadian-Molina said.

However, Mohammadian-Molina added that should this proposal progress and succeed, she does not see how it can be enforced.

“The problem that councils have is that currently there is no data, no registration system, where they can identify those properties let-out as holiday-lets to enable them to effectively enforce a cap on holiday-lets,” she said.

Do you expect the decision to allow local councils to ban future holiday-lets to produce more pros than cons? Let us know in the comments below.