London councils have slammed government plans for regulating the short-term and holiday lets sector.

In a letter to Housing Secretary Michael Gove, the Labour-dominated group called London Councils criticises the government’s proposal to create a new planning ‘use class’ for properties already used as short-term lets.

The councils claim that automatically transferring existing short-term lets into this new planning category under permitted development rights will mean the loss of thousands of homes from London’s permanent housing stock. 

London Councils estimates there are at least 43,000 short-term lets in the capital and believes a significant portion of these would qualify for the new planning category. 

London Councils welcomes Gove’s proposals for a mandatory national register of properties and continued planning permission requirements for future short-term lets.

However, the Labour-dominated group argues that automatically reclassifying existing short-term lets into a new planning category – the ‘C5’ use class – without requiring planning permission undermines efforts to preserve homes for residents amid worsening housing pressures and homelessness rates.

Research published last year by London Councils claims to have found a 41% reduction in the number of London properties available for private rent since the Covid-19 pandemic and Office for National Statistics data suggests London private rents increased 7% in the year to 2024 – the highest jump on record.

Data collated by London Councils in September 2022 found at least 11% of STLs in London appeared to exceed the 90-day limit on how often a property can be rented out as a STL before planning permission is required. 

Given the difficulties securing accurate, up-to-date data on STLs in the absence of a national register, the actual figure is likely to be significantly higher claims the group.

London Councils also expects the situation has worsened considerably since 2022.

The group demands strict planning application rules be maintained on all short-term lets and for local authorities to receive more resources for enforcement.

A spokesperson for the group – Labour councillor Darren Rodwell – says: “For too many years the short-term lets market has been growing out of control. 

“With housing and homelessness pressures in the capital worse than ever, boroughs are extremely concerned about losing permanent housing stock. The priority has to be ensuring homes are available for long-term residents. 

“We welcome the government’s move to improve regulation of the sector, but the blanket reclassification of existing short-term lets into a new use class could strip the capital of thousands of homes. 

“Boroughs are keen to work with ministers on developing these proposals further and ensuring London is better placed to tackle this challenge.”