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Restrictions on holiday-lets

Journalist: Jake Carter, Mortgage Introducer

ended 03. May 2023

Michael Gove, housing secretary has announced ministers intend to alter planning laws by the end of the year to give councils the power to ban future holiday-lets if their local area does not have enough affordable housing to rent or buy.

What are your views on this proposal? A good idea or a bad one?

Could this result in increased rental prices for holiday-lets if supply declines in hotspots?

How will this impact the holiday-let market as well as the wider mortgage market?

4 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
The housing secretary's efforts would be better directed towards addressing the broader issue of housing shortages for a growing population, rather than focusing on holiday lets.

Holiday lets play a crucial role in promoting tourism, which is vital for bolstering local economies, particularly during a cost of living crisis.

Rather than implementing more stringent planning laws, it might be advantageous to explore options for easing these regulations. Additionally, it is worth considering whether empowering local councils is the optimal approach to addressing this issue, as consistency in policy implementation and decision-making may be a concern.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
The proposed alteration to UK planning laws allowing local councils to ban holiday-lets in areas with a shortage of affordable housing could have significant impacts on both the holiday let and mortgage markets and needs to be approached with caution. While the changes may increase the supply of affordable housing to meet increasing demand, they could also limit opportunities for individuals to invest in the holiday let market and generate rental income. Reduced supply of holiday lets could result in higher costs for those seeking holiday accommodation in tourist hotspots, while lenders may become hesitant to offer mortgages for holiday let properties as they may be concerned about the potential risk of properties being banned in the future, potentially leading to higher interest rates and more stringent lending criteria. Decreased investment in the holiday let market could have negative implications for the wider economy, particularly in areas heavily reliant on tourism revenue.
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Kim McGinley
Director & Specialist Broker at VIBE Finance
Since the pandemic the rise of staycations in the UK and there for landlords diversifying into the holiday let sector grew greatly. Sadly the move by Michael Gove is not an unexpected one, with landlords being the main target when it comes to government policies and changes.

On one hand, the holiday let sector is driving up local economies with so many people either choosing to not go abroad since the pandemic or due to affordability at the moment it makes more sense to stay here in the UK. By implementing this council by council - of course it will drive rents higher in hotspots.

Will it address the wider and real issue of a housing shortage here in the UK? Absolutely not.
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Kevin Dunn
Mortgage and Protection Adviser at Furnley House
Whilst I agree in principle with the sentiment here, the devil is in the detail and I worry about the capability and capacity of the local councils to implement these new laws effectively.