One interesting outcome of the Covid pandemic has been the sharp rise in the phenomenon of the “staycation”.  People have been forced to shun overseas travel, looking closer to home for their holidays and holiday accommodation, and all this has contributed to the flourishing of the Airbnb model of holiday letting.

At first glance we might just embrace these informal letting arrangements as a good example of people’s entrepreneurial spirit; part of the positive economic news as we emerge from Covid. Many across the holiday sector enjoyed high demand for accommodation (although holidaymakers felt the consequential rise in prices) and this was not just in hotels and traditional “B&Bs” but, also, at the newer, Airbnb end of the market.

There is much to consider when embarking on any letting business, questions such as whether or not planning permission is needed; health and safety issues; rates; insurance and lease covenants (which may prohibit short or long-term letting). A recent appeal decision – arising in respect of the Community Infrastructure Levy (“CIL”) but relevant to this topic – has also raised afresh the planning law question: which Use Class is the correct one for a property used as a holiday let?

What is the correct Use Class for holiday lets?

When a property which is usually occupied as a residence, in the ordinary sense, is put to use as a short-term holiday let, you do not need to be a legal expert to see that there is, in practice, a qualitative change in the use of the property. Neighbours of adjoining properties are often acutely aware of the shift, whether it be the regular checking in and out of new arrivals, increased use of communal areas (a common complaint) or (in the worst cases) the noise of high-spirited holidaymakers enjoying themselves.

Any planning lawyer can tell you that the “normal” residential use of a property, occupied as a home on a permanent basis, comes within Use Class C3. This applies whether or not it is owned freehold or leasehold. It is sometimes thought that holiday lets fit more happily within Use Class C1, which is ordinarily thought of as a hotel use. If that were correct, it would of course mean that planning permission was required for the change. However, uses within Class C1 are associated with a high level of ancillary services provided with the accommodation like food and laundry, not just room cleaning and changing bed linen as is normally the case with an Airbnb.

The CIL appeal

The CIL appeal referred to above determined that a property used exclusively for holiday lets, in the particular circumstances of that case, was indeed a use within C3. Planning permission was not needed and there was an initial sigh of relief, no doubt, on the part of the owner. However, there was a significant sting in the tail. Although there was found to be no change in Use Class, this meant, in this case, an unexpected liability to CIL. By contrast, no CIL would have been payable for a C1 use.  

This does seem to be another example of one of the ways in which planning law is somewhat out of date. It should fall to policy makers to consider creating a Use Class that better reflects current practice in the market (as was done with the creation of the new Use Class E). In the meantime, those who wish to take advantage of the fashion for informal short term lets should make sure they have checked – and ticked – all the relevant legal boxes.

Further information

For more information on the issues raised in this article please contact:

• Karen Chapman on 020 7216 5591 or email k.chapman@druces.com
• Christopher Proudley on 0207 216 5542, or email c.proudley@druces.com