London’s STR market has been in the spotlight recently, as new studies have shown the short-term rental crisis is deepening with the rapid growth of illegal operators. In his coverage, Westminster City Council head Adam Hug identified one of the big problems. His borough faces some of the highest concentrations of short-term lets across the UK including areas of concentration in the West End, Bayswater, Lancaster Gate and areas of Pimlico.
The short-term let sector in short, has exploded over the last decade. In 2015, there were fewer than 30,000 short-term lets on record in London. This figure more than doubled in 2016, increasing to 60,000 and peaking at over 100,000 in 2019. The advent of the Covid-19 pandemic led to a radical drop in all these numbers in 2020. After this, the market started a strong consistent rebound.
Even with this positive regression, red flags have started to raise about their adherence with current regulations. Our research found that as of 2024, 54% of London’s short-term lets were booked over 90 days a year. This breaks the legal cap set for landlords. Under current regulations, property owners can only rent their homes on a short-term basis for more than 90 nights a year if they obtain planning permission from their local council.
Tom Copley, Deputy Mayor for Housing, Development and Planning, is as alarmed as anyone by the state of London’s housing. He appeals for the focus to become improving these properties to make them permanent housing solutions. “We need to bring those properties back into use as long-term rented properties or long-term properties for people to buy and live in as owner-occupiers,” Copley stated.
With each month, the chorus of voices grew louder with calls for the federal government to Do Something. A government spokesman noted that while short-term lets can generate economic benefits for tourism, excessive concentrations can lead to rising housing costs and negatively impact local communities. “This concentration has a profound effect on our local communities,” Hug remarked.
That was the tone of the Centre for London think tank’s annual housing summit, held last Wednesday. There, Mr. Hug passionately urged the need for regulation as he delivered the report that spurred these concerns. He noted that currently, local jurisdictions do not have the capacity to actually enforce those rules on a large scale that’s needed. “At the moment, it isn’t possible for local authorities to effectively, at scale, enforce the existing regulations,” he said.
In a bid to address these issues, a spokesman for the government outlined new measures. Their goal is to create a short-term let registration scheme that harnesses the positives of tourism while preserving the integrity of local communities. “We will introduce a short-term let registration scheme to reap the benefits of a thriving tourist economy while protecting the spirit of our communities,” he stated.
The federal government is definitely moving in the right direction by curbing the incentives for landlords. They’ve replaced the furnished holiday lets tax regime as well as incentivising conversions from permanent homes to holiday rentals. “That’s why we have abolished the furnished holiday lets tax regime so that landlords are no longer incentivised by the tax system to rent homes as holiday lets,” the spokesman explained.
With London in the midst of a housing crisis epidemic, causing 65,000 households to be placed into temporary accommodation on any given day. Lawmakers and community leaders are organizing, demanding better regulatory structures. The urgency of the situation has sparked discussions about national government involvement in empowering local authorities to manage short-term lettings effectively.
