Brokers believe the government should focus on broader affordable housing issue instead
The announcement that planning laws may be altered by the end of year, allowing councils to ban future holiday-lets in their local area if it does not have enough affordable housing to buy or rent, has been met with caution by brokers.
Patricia McGirr (pictured), managing director of Finanze Success at Finanze Group, said the proposed revision to UK planning laws, could have significant impacts on both the holiday-let and mortgage markets.
Impact of change
McGirr reasoned that while the changes may increase the supply of affordable housing to meet increasing demand, it could also limit opportunities for individuals to invest in the holiday-let market and generate rental income.
“Reduced supply of holiday-lets could result in higher costs for those seeking holiday accommodation in tourist hotspots,” McGirr said.
She added that lenders may also become hesitant to offer mortgages for holiday-let properties as they may be concerned about the potential risk of properties being banned in the future, potentially leading to higher interest rates and more stringent lending criteria.
“Decreased investment in the holiday-let market could have negative implications for the wider economy, particularly in areas heavily reliant on tourism revenue,” McGirr said.
Kim McGinley, director and specialist broker at VIBE Specialist Finance, suggested that since the pandemic, the rise of staycations in the UK, and therefore landlords diversifying into the holiday-let sector, grew greatly.
“Sadly the move by Michael Gove, housing secretary, is not an unexpected one, with landlords being the main target when it comes to government policies and changes,” McGinley said.
The holiday-let sector was driving local economies, she argued, and by amending the planning laws council by council, rents would soar hotspots. McGinley did not believe it would address the wider and real issue of a housing shortage in the UK.
Better focus elsewhere
Riz Malik, director at R3 Mortgages, said the housing secretary's efforts would be better directed towards addressing the broader issue of housing shortages for a growing population, rather than focusing on holiday-lets.
“Holiday-lets play a crucial role in promoting tourism, which is vital for bolstering local economies, particularly during a cost-of-living crisis,” he said.
Rather than implementing more stringent planning laws, Malik said it might be advantageous to explore options for easing these regulations.
Additionally, Malik believed it was worth considering whether empowering local councils was the optimal approach to addressing this issue, as consistency in policy implementation and decision-making might be a concern.
Meanwhile, Kevin Dunn, mortgage and protection adviser at Furnley House, said whilst he agreed in principle with the sentiment of the changes, he said the devil was in the details.
“I worry about the capability and capacity of the local councils to implement these new laws effectively,” he said.
What are your views on the governments’ announcement to potentially alter planning laws on holiday-lets? Let us know in the comment section below.
