Nyree Applegarth, Head of Property Disputes, looks at how proposed rules could hamper people’s ability to offer holiday lets.
I regularly advise on restrictive covenants that prevent a property from being used for anything other than private residential use.
New-builds, in particular, tend to have restrictive covenants in place and people often fall foul of the rules by offering business services from home, such as dog grooming or beauty therapies.
In recent years a significant part of my workload has been around private properties being used for holiday lets, given the proliferation in Airbnb letting.
In many instances homeowners have been letting out their property for a number of decades and are then asked to cease letting, often when a neighbouring property changes hands and an eagle-eyed neighbour spots that there is a restrictive covenant in place.
It can be very frustrating for people to find that they have purposely bought a property to use it for holiday lets and have done so for a number of years and then be asked to stop.
The whole essence of covenants being imposed is to benefit people that live on a permanent basis, in a particular locality, as it is recognised that someone renting a property for a few nights or a week or less often goes there to let their hair down and is far noisier and uncaring about the neighbours than they would be if they were living next door to them on a permanent basis.
I therefore read with interest a recent article indicating that in rural areas such as Cornwall and Devon, Tory MPs are now lobbying for second homeowners to be forced to obtain permission from their local Council to be able to operate short-term holiday lets.
The Scottish Government announced a similar licencing scheme in 2021 which will require homeowners to register their properties with the Council by 2023. It is certainly the case that the number of short-term holiday lets has increased more than tenfold in the past six years and is now a profitable enterprise for many people.
However, the surge in holiday letting has been blamed for pricing locals out of desirable locations and leading to an increase in antisocial behaviour. The Government is trying to make sure that first time buyers can afford properties in more rural locations and the Government has now announced that second homeowners who masquerade to rent out their properties for holiday lets would no longer be able to exploit a tax loophole. Holiday lets are going to have to be rented out for at least 70 days a year to qualify for business rates.
Naturally, any tightening of the rules in relation to holiday letting will be to the dismay of organisations such as Airbnb and I await with interest the Governments’ ongoing proposals in this area.
