Leading letting agent Marc von Grundherr (pictured) has labelled the Michael Gove's crackdown on short lets “ironic”, given his Government's hard line on buy-to-let landlords.

The boss of London letting agency Benham and Reeves says the rise of short lets in holiday hotspots is, in part, due to the government making it more attractive tax-wise to invest in Airbnb lets than traditional ones.

Under recently announced new rules, landlords will have to seek planning permission to convert properties into short lets. A mandatory national register of short-lets properties and the landlords who own them will also be set up to help local authorities enforce health and safety regulations.

“It’s fair to say that this latest announcement is a somewhat ironic one, given that the government are the ones to blame for a rise in short-term lets in the first place,” says von Grundherr.

“Having waged war against landlords by reducing buy-to-let profitability via a string of legislative changes in recent years, they have inadvertently fuelled the boom in short-term lets.”

Profit margins

Buy-to-let investment is a business which means a landlord’s biggest concerns naturally lie with the profit margins they can achieve, he tells LandlordZONE.

“Where they’ve really been hit hard is with changes to capital gains tax, as well as no longer being able to deduct mortgage interest from rental income when calculating their taxable profits.

“Reversing both of these previous changes would make a real difference when it comes to encouraging landlords to stick with long-term lettings.”

Many landlords have been tempted to move to holiday lets due to the returns; the average annual holiday let income exceeded buy-to-let income for the first time in 2020-21, reaching £15,600 compared with £13,400, according to HMRC.

Holiday let income has risen by an average of 63% in the past decade compared with just 5% for buy-to-let.