Short-term lets: the rules investors need to know

Short-term letting, from serviced apartments to holiday cottages, can earn more per night than a standard tenancy, but it carries more rules, higher running costs and more regulatory change than a standard tenancy. Several proposals have been announced in England over the past few years, and not all of them have happened. This guide separates what is law today from what is planned, as of 22 October 2026.

The position today at a glance

Planning in England

London: the 90-night rule

In Greater London, using residential premises as temporary sleeping accommodation is treated as a material change of use, which needs planning permission. The Deregulation Act 2015 created an exception, now section 25A of the Greater London Council (General Powers) Act 1973. Short-term letting does not need permission if two conditions are met:

• the nights let in the calendar year, added to any earlier nights of such use of the same premises that year, do not exceed 90; and
• for each night, the person providing the accommodation, or at least one of them, is liable for council tax on the premises.

The count belongs to the premises, not the host, so nights let by a previous provider in the same year count towards the 90. A council can also direct that the exception does not apply to specified premises or areas where that is necessary to protect the amenity of the locality, which needs the Secretary of State's consent unless that power has been delegated. Beyond 90 nights, the Greater London Authority's guidance is clear: the property needs planning permission from the local council.

Outside London

There is no national night limit elsewhere in England. GOV.UK guidance says your local planning authority will decide whether you need planning permission, based on how the property is used for short-term letting and its impact on neighbours and the local area. In practice this means checking with the council before buying a property for this purpose, especially for a whole flat in a residential block.

The proposed use class: still a proposal

In February 2024 the previous government announced plans for a new planning use class for short-term lets not used as a sole or main home, with permitted development rights to move between that use and an ordinary home, and powers for councils to remove those rights locally. As of 22 October 2026, the Use Classes Order for England contains no such class: Part C still runs from C1 to C4, with C2A. Wales has already made separate classes for second homes and short-term lets in its version of the order. Treat any article that describes an English short-term let use class as current with caution.

The national register

A mandatory national registration scheme for short-term lets in England is planned, and GOV.UK marks it as not yet in force. Government guidance updated on 2 October 2026 says it is expected to begin in March 2027. Once it opens, registration will be mandatory, so it belongs in the plan for any short-let purchase made now.

Tax: the end of furnished holiday lettings

The furnished holiday lettings (FHL) regime used to give qualifying holiday lets tax treatment closer to a trade. It was abolished from 6 April 2025 for income tax and capital gains tax, and from 1 April 2025 for corporation tax. Since then, holiday and short-stay income has been taxed under the usual rules for residential landlords.

An anti-forestalling rule stops unconditional contracts signed before 6 April 2025 and completed afterwards from being used to keep the old reliefs, unless the contract was made wholly for commercial reasons or between unconnected parties. Our limited company guide covers how mortgage interest is treated when property is held in a company, and the landlord tax calculator estimates the effect of the restriction.

Business rates or council tax

A self-catering property in England can be assessed for business rates instead of council tax if, within a 12-month period, it was available to let commercially for at least 140 nights and actually let commercially for at least 70 nights, and you intend to make it available for at least 140 nights in the following 12 months. GOV.UK updated this guidance on 29 September 2026 to cover owners with five or more lets. If the tests are not met, the property stays in council tax. In London, the 90-night exception depends on someone being liable for council tax, so a property moved to business rates needs planning advice.

Mortgages, leases and insurance

Planning is only one permission. The Greater London Authority lists the others to check before letting a property short term, and the same checks are sensible anywhere: the landlord, if you rent the property; the freeholder, if it is leasehold, as a flat is likely to be; your mortgage lender; and your insurer.

• Mortgages. The Prudential Regulation Authority's definition of a buy-to-let mortgage contract treats an agreement to stay for less than one month as not being occupation under a rental agreement. A standard buy-to-let mortgage may therefore not permit nightly letting, so check the lender's terms or use a product designed for it. Our buy-to-let mortgages guide explains how lenders assess rental income.
• Leases. Lease covenants can restrict how a flat is used. Some developments are set up for it: Abbey Row in Liverpool's Knowledge Quarter, one of the independently marketed developments on our opportunities page, has short-term letting approved on a 999-year lease.
• Insurance. GOV.UK says short-term lets should have holiday let insurance, public liability cover and buildings and contents cover suitable for short-term letting.

Safety

Hosts must follow fire safety guidance for paying guest accommodation, with separate guidance for small properties of no more than 10 people or 2 floors and for larger or more complex ones. Health and Safety Executive guidance on gas safety, carbon monoxide and electrical safety also applies, alongside the electrical safety standards for rented property.

Scotland: licensing is mandatory

Scotland regulates short-term lets through licensing. The law changed on 1 October 2022. Hosts already trading before then who applied before 1 October 2023 could continue while their application was considered. Today a licence is required regardless of how long you let the accommodation for, and new hosts must obtain one before accepting bookings or receiving guests.

Councils can also designate short-term let control areas, where changing a home into a secondary short-term let needs planning permission. Edinburgh became the first on 5 September 2022, and Highland Council designated the Badenoch and Strathspey ward on 4 March 2024. In a control area, a licence application for secondary letting needs planning permission to have been applied for or granted first. Our Edinburgh and Glasgow guides cover those markets.

Running the numbers honestly

A nightly rate is not a yield. Short-term income depends on occupancy, seasonality and reviews, and it carries costs a standard tenancy does not: cleaning and laundry between stays, platform or agency commission, utilities, broadband, furnishing to a higher standard, and either council tax or business rates. Because the FHL reliefs have gone, the tax comparison with a long let is now closer than it was.

A fair test is to model the property both ways. Run a conventional tenancy in the rental yield calculator, then build the short-let case in the deal analyser with your own occupancy and cost assumptions, and compare the net figures rather than the headline rent. If the property is let on a standard tenancy instead, the Renters' Rights Act rules apply. Once let, PROXERA keeps the income, costs, certificates and key dates for each property in one account, so the comparison carries on after purchase.