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Your Guide to What's Changing for Short-Term Lets and Second Homes in England and Wales

As the popularity of short-term lets continues to rise in England and Wales, the government has been taking steps to introduce new regulations and tax rules to ensure that the industry is operating in a fair and transparent manner. In this guide, we'll take a look at the latest changes that have been announced, how they will affect second-home owners and landlords, and what impact they may have on local communities.


Tax rules for short-let properties

At present, second home owners in England and Wales can access small business rates relief by declaring an intention to let the property out to holidaymakers for short periods totalling a minimum of 140 days per year. However, this loses local authorities an estimated £110 million per year due to the lack of proof required.


From April 2023, second home owners will need to prove that they have let their properties out for a minimum of 70 days and be "available" to let out for a minimum of 140 days to benefit from business rate relief. The government has suggested that the website or brochure used to advertise the property, letting details and receipts could all be used to prove that the property meets this criteria.


In addition, councils will be granted powers to double the standard council tax rate on any home left empty for longer than a year, rather than the current two years. These changes are aimed at encouraging more empty homes back into productive use, while raising additional revenue to support local services and keeping council tax down for local residents.


Proposed regulations for short-term lets in England

The government has committed to look into the possibility of a "tourist accommodation registration scheme" in England, through the Tourism Recovery Plan. This approach was confirmed in the new measures announced for the Levelling Up and Regeneration Bill in December 2022.


A consultation will also be launched into whether new short-term lets would need planning permission, particularly in tourist hotspots. MP Tim Farron has also proposed a "seven point plan to limit the number of second homes" to help solve the housing crisis.


Proposed regulations for short-term lets in Wales

The Welsh government has previously committed to creating a statutory licensing scheme for holiday lets, as part of a package of measures "to address the negative impact second homes and short-term holiday lets can have on the availability and affordability of housing for local people in our communities."


A consultation on the scheme is now open, closing on 17 March 2023. The aim is to provide a comprehensive database to help monitor how many visitor accommodation businesses operate in Wales, and to help the government understand the scale and nature of this sector.


The impact of short-term lets on local communities

While short-term lets can offer tenants more flexibility in the short term and often provide them with a cheaper alternative to traditional holiday accommodation, concerns have been raised about their impact on local housing markets. An influx of investors in holiday lets can mean fewer long-term rentals available and may also affect compliance with tax and health and safety regulations.


Lord Greenhalgh, the Minister for Building Safety and Fire, has stated that the impact of any legislation introduced would be difficult to define. In some areas where tourism is important, it can provide a great boost to the economy, but in others, it may result in the hollowing out of a particular area.


Regulations for short-term lets in other countries

Northern Ireland requires certification for tourist accommodation, while Scotland is in the process of introducing a licensing scheme for short-term lets to support its existing "control areas." These changes will help manage high concentrations of secondary letting.


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