Government initiatives to promote the sharing economy by relaxing rules on sub-letting and short-term home rentals will drive down standards in the sector, property experts have warned.
Under proposals contained in this year’s Budget, the government will make it easier for individuals to sub-let a room by preventing the use of clauses in private fixed-term residential tenancy agreements that rule out sub-letting or sharing space on a short-term basis.
The government will also consider extending these measures to statutory periodic tenancies.
In February housing minister Brandon Lewis confirmed plans to remove restrictions on Londoners who want to rent out their rooms on websites such as Airbnb and Onefinestay, which have proven wildly popular in recent years.
Daniel Watney, a leading London property consultancy, warned then the changes would lead to a surge in unauthorised lettings. It would encourage tenants and leaseholders to sublet homes without their landlords’ consent. In spite of this, landlords would ultimately be held responsible for any consequences.
However, under these latest proposals, sub-letting would become the norm.
Daniel Watney’s head of residential, Julian Goddard, fears rather than responsible owner-occupiers occasionally seeking to let unoccupied units, the change in law will be used by those seeking to exploit tourists and others wanting cheap accommodation in the capital.
Properties advertised on sites like Airbnb aren’t subject to the same health and safety standards as hotels. This has drawn the ire of many hotel chains in recent years. Landlords too have to comply with similar standards.
Currently, under Section 25 of the Greater London Council (General Powers) Act 1973, use of residential premises for temporary sleeping accommodation for less than 90 consecutive nights is considered a change of use, which requires planning permission.
As a result, thousands of Londoners may be unknowingly in breach of Section 25, for which the penalty is a £20,000 fine. Enforcement has been uneven over the past few years. One case in point was the 2012 Olympics, when many in the capital sought to profit from the huge influx of visitors seeking temporary or overnight accommodation.
The government wants to remove the need for planning permission for those seeking to rent out their home as part of a wider effort to boost the ‘sharing economy’, which PwC says could be worth £9bn to the UK by 2025.
A number of London councils rejected the changes, worrying over disruption to neighbourhoods and reducing London’s limited residential stock even further by transforming flats and houses into informal hotels.
As a concessionary measure, the government set an annual three-month limit on short-term lets, although some councils called for it to be cut down to just one month.
Julian Goddard, head of residential at Daniel Watney, said:
“Despite laudable intentions, the unforeseen consequences could be rather serious. These proposals go against the grain of the government’s recent efforts to better protect landlords and tenants alike with new safeguards.”