how will it affect Airbnb and tourism?

After the increasingly intense debate, changes may finally be coming to the way England regulates short-term rentals and holiday homes, which are commonly advertised on platforms such as Airbnb.

Amid an acute housing shortage, locals in rural and coastal towns popular with tourists and densely populated with short-term rentals are facing sky-high rents and property prices – but that could soon change. The Government is considering giving significant powers to councils: allowing them to refuse short-term lettings if properties are deemed to be taking too much capacity from the local housing market.

Last month, the government announced two consultations on similar regulation in England, due to conclude by the summer. The first, led by the Department for Upgrading, Housing and Communities (DLUHC), suggests that householders must obtain planning permission from their local council to use a short-term rental property. The second, led by the Ministry of Culture, Media and Sports (DKMS), proposes creating a register of all such properties in the country.

Outlining its aims for the consultation, the government said it wanted to “give communities more control over short-term letting in tourist hotspots” while “strengthening the tourism sector”. But is it possible to please everyone?

Some industry insiders, such as Andy Fenner, chief executive of the UK Short-Term Accommodation Association (STAA), believe short-term rentals are “one of the few successful rural businesses [models] and drivers of investment in rural communities”. Others, such as Chris Bailey, national campaign manager at Action on Empty Homes, which has argued in favor of councils having the power to refuse short-term lettings, believe they inflate prices for buyers and tenants. Bailey says they make “housing that would be affordable for people in the long term cease to exist”

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Last autumn, the Welsh Government announced changes to its planning system which included a new special categorization for short-term lets, which it said would allow councils to “control” the number of such properties “in an area”. The most significant legal changes in the UK, however, came in Scotland.

From October 2022, the Scottish Government requires all prospective hosts to apply for a special license before accepting bookings. (Those who provided short-term rentals before the new law could continue to host guests while they applied for a license.) No national system was put in place to match or process this change; only guidelines were issued. Each of Scotland’s 32 local authorities had to decide for themselves how to implement the new law.

The result is variable fees, different levels of detail required in applications, and the creation of different, sometimes strange, rules for obtaining approval. Some councils, for example, authorized householders to hire second-hand carpets or provide ‘similar floor covering’. Those who fail to comply can face fines of up to £2,500. However, in December the Scottish Government extended the registration deadline by six months to October 2023, citing the impact of the cost of living crisis.

The DLUHC consultation on a planning permission system for England mimics that of the licensing system in Scotland. “If we do the same thing in England, the same thing will happen,” Fenner said. “This is the wrong legislation. We don’t need extra planning burdens [permissions]. The planning system cannot keep pace with housing development [targets]let alone have more things thrown at it.

[See also: Why don’t we have a Department for Housing?]

In 2019, the Scottish Government published a report on ‘the impact of short-term letting on communities in Scotland’. According to the study, Scotland had 31,884 active listings on Airbnb as of May 2019, a “triple increase” since April 2016. Figures published by Airbnb in 2018 claimed that each listing in Scotland generated 52 visitors in the country , which means a total of 1.6 million additional guests. A 2019 Scottish Government report concluded that these additional visitors contributed to “increased costs [and] increased availability of jobs, often year-round’.

But there were also problems. Following surveys and interviews with residents, landlords and local businesses, the research found that properties often change from ‘long-term private letting and owner-occupied [short-term lets]’, which contributes to a ‘shortage of housing supply and affordability’. These issues led to a shortage of ‘labour supply’ in rural Fort William and Skye (two of five case study areas) as people were pushed out of the buyer and rental market.

The short-term tourism sector argues that excessive regulation will harm the nation’s tourism and hinder economic growth. “The vacation we’re talking about is small business in areas of the country where there’s no other investment,” Fenner said. “We have to respect the fact that tourism is a vital engine [of income] and provides good-paying jobs in our communities.”

[See also: Inside Britain’s housing crisis]

Giving councils the power to regulate the sector could go some way towards filling the housing shortage in rural and coastal communities. But this cannot make up for successive governments failing to build enough affordable housing stock.

“I couldn’t have bought a house in the country village I grew up in 25 years ago, before Airbnb, because housing prices were too high then and they’re too high now,” Fenner said. “Not a single new house has been built since I was born there – and that’s over 40 years ago.” Bailey added: “If we had [a bigger] providing housing that is affordable and affordable for people in the long term at secure rents – ie. social and council housing – then we don’t necessarily have to have this debate because [short-term lets] the market will be separated.”

The housing shortage in coastal towns, he continued, means places like Cornwall “have a shortage of people who can afford to live in the area to do the work needed to keep the tourism industry alive”.

The government recently backtracked on its 2019 manifesto pledge to build 300,000 homes a year. Overall, there is a balancing act: a shortage of housing drives up rents and property prices, and while the amount of property used for short-term rental is small compared to what is needed to meet overall demand, it still contributes about the problem – to what extent is the subject of fierce debate. But if the new regulation reduces short-term rentals available in coastal and rural towns, the local tourism industry across the country is likely to suffer as well.

“National landlord bodies have calmed the narrative of landlords being pushed out of the market by new legislation as private [letting and second home] the sector is actually still growing,” Bailey said. “But even if it were, would it be bad? It would be bad if they were providing truly affordable housing on a mass scale – and they are not.”

This piece is included in the new Spotlight on Regional Development published on 4 May. Read here

[See also: Housing crisis: A generation locked out]

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