New law could ‘exacerbate rather than control’ short-term lets, warns Camden’s planning department

The Government’s proposed changes to housing legislation may “exacerbate rather than control” the thousands of private-rented homes being used for short-term lets (STL) in the London Borough of Camden, councillors have been told.

Members were given an update on the proposed new planning designation “Class C5”, a new permitted development right, and a registration scheme for short-term letting, at a planning policy meeting this month.

A ministerial statement in February suggested that a new property classification will be created for future short-term lets that are not used as a sole or main home, and that existing short-term lets will be automatically reclassified into the new category and will not require a planning application, states a report on planning reforms presented to councillors.

This has also created a loophole where landlords may seek to change permanent homes into short-term lets after the legislation is enacted but before the end of the 12-month period when local council’s can implement their own controls known as an “Article 4 Directive”.

In response, Councillor Danny Beales, Camden’s cabinet member with responsibility for planning and housing, wrote to Michael Gove, secretary of state for levelling up, housing and communities to say he welcomed “the Government’s acknowledgement that the growth in short-term lets has had a detrimental impact on the supply of permanent homes and resulted in the hollowing out of many communities”.

But Beales warned that some of the “measures proposed may actually exacerbate rather than control and manage the situation.”

Camden currently has approximately 6,000 properties being used for short-term letting. If these properties were to be automatically reclassified as short-term lets under the new use-class, it would mean a loss equivalent to the amount of housing Camden is expected to deliver in the next six years and a financial loss of Council Tax income of £9,235,020 a year.

“Whilst Camden has gone to considerable lengths to investigate and take enforcement action against unauthorised changes of use from permanent homes to short-term lets, without a register it has been incredibly difficult to limit the spread,” he wrote.

“To allow those who have evaded the planning regulations to then benefit from automatic planning permission to Class C5 is not considered to be appropriate.

“If a mandatory register for all short-term let use was introduced this would provide a tool for all councils to effectively tackle unlawful short-term lets and potentially return significant number of homes to the housing market.

“Whilst Camden supports homeowners renting their homes for less than 90 nights during the year to make additional income, our experience is that the provision of short term lets is largely provided by professional users who rent properties all year as short term lets,” he wrote.

The south of the borough saw the highest number of the 6,215 short-term lets in 2020 — and  Bloomsbury and Fitzrovia is a hot spot, according to maps produced in a report by Camden’s housing department.

Short-term and holiday lets are significantly more profitable for private landlords. In Camden, the owner of a one-bedroom studio could make £1072 per month on the private rented market compared to £1,173.06 per week as a short-term let.

The council has the power to issue an “Article 4 Directive” to prevent the permitted development right being used by landlords in areas where the changes would undermine the supply of private-rented accommodation.

However, Beales wrote to the secretary of state, saying: “We recognise that there is scope for an article 4 direction,” but a “12-month delay means we would be closing the stable door after the horse has bolted.”

Camden’s planning department has suggested that the government makes a number of amendments to the legislation to both close the loophole and tighten the restrictions so that the loss of thousands of homes in the borough can be prevented.

These amendments are:

• Only lawful short term lets (either those which have planning permission or can via a certificate show 10 consecutive years of STL use) uses should be automatically designated as Class C5;
• C5 should be defined as any property which is rented for more than 90 nights each year;
• Planning permission must be required to change between Class C3 to Class C5. This would enable LPs to control the loss of residential home, ensure suitable locations and controls for C5 uses.
• If any permitted development rights are proposed there must be at least a year’s transition before it comes into effect to give councils time to put a non-immediate direction in place;
• The STL register should be for all STL use whether they are less than 90 days or more than the threshold and must include penalties for misuse.

The government is shortly expected to announce further details on the planning reforms, including a timeline for their implementation. It is expected that the changes will be introduced this summer.

Camden Council: Policy and Performance, Planning Committee – Monday 8 April 2024.