Serviced Accommodation: Which Laws Are Changing?

The laws around holiday lets are changing – affecting budding property investors.

Levelling up secretary, Michael Gove, is considering forcing landlords to submit a “change of use” planning application to the council in order to turn properties into short-term lets, such as Airbnbs.

Meanwhile, business rates thresholds have also changed.

This blog post explains all you need to know.

What are holiday lets?

Holiday lets, also known as serviced accommodation, are properties that are used for holiday stays, with the term also encompassing any corporate travel or temporary accommodation, associated with short term lets.

Let-lengths usually range from a few days to 2-3 weeks, and holiday lets are often decorated to a high standard and contain everything that a person would need when staying away from home.

Usually, holiday lets are located in tourist areas or close by to areas of interest. Alternatively, they can be located in city centres or close to sites of major festivals.

What are the current key legal requirements for holiday lets?

Holiday lets legal rules are in place for a reason, but are relatively easy to adhere to:

• • The holiday let must be actively promoted and let commercially, with the intention of making a profit
  • The property must be available for commercial holiday letting to guests and holiday makers for at least 210 days (30 weeks) per year
  • If the furnished holiday let is rented out by the same person for more than 31 days, then there shouldn’t be more than 155 days (+22 weeks) of this type of ‘long term’ occupation per year
  • The property must be rented out as holiday accommodation to the general public for a minimum of 105 days (15 weeks) out of the 210 days that it has been made available
  • The property needs to be adequately furnished and equipped

  There are other laws associated with insurance, health and safety and more which can be found here.
  
  

  What rules are changing on holiday lets and serviced accommodation?

  
  The holiday let law that is changing on 1st April 2023 is associated with what constitutes a self catering property and business rates.
  
  

  What are business rates?

  
  Business rates (sometimes called commercial rates) are a tax levied on business properties. The money collected is channelled by local communities into services such as police, fire and waste management, in many ways similar to council tax.

  

• What are the rules on business rates for holiday lets?

  
  Until 31 March 2023, if a property in England is available to let for short periods of at least 140 days per year, it will be rated as a self-catering property and valued for business rates.

  If the property is in Wales, it will be rated as a self-catering property and valued for business rates, if:

  • It is available to let for short term periods for at least 140 days per year
  • It is let for at least 70 days per year

   
  

  What are the new rules on holiday lets from April 2023?

  
   From 1st April 2023, it will be rated as a self-catering property and valued for business rates if both:

  • Available to let for short periods for at least 140 days in total over the current and previous tax years
  • Let for at least 70 days in the last 12 months

  
  If in Wales, it would be the case if:

  • It is available to let for short periods for at least 252 days in total over the current and previous tax years
  • It has been let for 182 days in the last 12 months
    

   

  
  

• What other holiday let and serviced accommodation laws could change in 2023?

  
  Levelling up secretary, Michael Gove, is debating requiring landlords to submit a “change of use” planning application to councils should they want to turn properties into short term holiday lets, like Airbnb.

  The move is supported by former cabinet ministers. Theresa Villers backs a further change requiring planning permission to change the use of a property to a tourist rental. She is also encouraging the changing of the statutory limit for starting developments after planning permission from two years to one, and giving new powers to revoke planning permission from developers who have not started construction.

  What opportunities are available to holiday let property investors?

  
  The holiday lets law change and proposals presents opportunities for property investors.

  The new laws provide a further safeguard to investors who less frequently sell out the property.

  The change to planning permission could also create opportunities for property investors, should it raise the bar for quality in the community.

  The current economy is also favourable to UK holiday lets. In previous economic downturns, there has been an increased trends towards UK staycations citing an advantage of UK coastal and city breaks.

  Visit Britain also acknowledged a “legacy effect” towards British holidays on the back of this types of economic climate.

  You can read more in Paul Smith’s Serviced Accommodation Manual, where he reveals secrets to holiday let success.

  To make the first steps on your property journey, read this free Wealth Through Property e-book.

  For more information call us at 01302 897131 or email office@touchstoneeducation.co.uk.