Written statement to Parliament

Short-term use of residential property in London

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Housing Minister's statement about short-term use of residential property in London.

Promoting the sharing economy in London

I would like to provide the House with further details of the coalition government’s intentions for the reform of legislation on short-term letting of residential accommodation in London through Clause 33 of the Deregulation Bill.

The Greater London Council (General Powers) Act 1973 provides that the use of residential premises for temporary sleeping accommodation for less than 90 consecutive nights in London is a change of use, for which planning permission is required. London residents face a possible fine of up to £20,000 for each ‘offence’ of failing to secure planning permission.

There are currently thousands of London properties advertised on websites for use as short-term accommodation. However, each is potentially in breach of Section 25 as it stands. The current outdated legislation is inconsistently enforced, leading to confusion and uncertainty for householders, as was apparent during the 2012 Olympics. These laws do not operate outside London, without any visible adverse effect. We want to update these laws to help boost the sharing economy, in light of the popularity of websites like Airbnb and Onefinestay to help people rent out their property for a short-term basis.

My department has now published a policy document which responds to our review of property conditions in the private rented sector discussion document, and sets out the government’s approach to modernising this out-dated legislation, so that residents can allow their homes to be used on a short-term basis without unnecessary red tape. The government has carefully considered the views put forward in response, and in the debates in both Houses, and in bringing forward changes we will also offer safeguards to protect London’s housing supply and residential amenity.

The government wants to enable London residents to participate in the sharing economy, and enjoy the same freedom and flexibility as the rest of the country to temporarily let their homes, without the disproportionate burden of requiring planning permission. It will provide income to householders who want to rent out their home – for example, if they themselves go on holiday. I believe this will be popular with London residents, as evident by the support for our planning reforms to make it easier for householders to rent out their spare parking spaces. A further benefit will be to increase the amount of competitively priced accommodation available for tourists to rent, promoting economic growth from tourism, as well as reducing the amount of under-used and otherwise empty property in London. These reforms will primarily benefit homeowners; the changes will not affect any existing clauses in tenancy contracts which prohibit sub-letting by tenants.

In order to address the issues raised by the consultation, the government intends to restrict short-term letting of residential premises to a maximum of 90 days in a calendar year, so that properties cannot be used for short-term letting on a permanent basis throughout the year. In addition, the government also intends to put in place additional safeguards through regulations. These will include that to benefit from the new flexibility the properties must be liable for Council Tax (thereby excluding business premises); that the new flexibility can be withdrawn following a successful enforcement action against a statutory nuisance, and that in exceptional circumstances local authorities will be able to request that the Secretary of State agrees to small localised exemptions from the new flexibility, where there is a strong amenity case to do so. These are practical concessions that I hope will illustrate that we have carefully listened to the points made by Parliamentarians in both Houses in recent months.

The policy document is being published on my department’s website and has been placed in the libraries of both Houses.