Short-term letting has become a key part of the London property market, offering owners higher income and greater flexibility than traditional residential tenancies. For property managers, however, the model creates a more complicated picture.
Flats marketed through Airbnb and other short-term accommodation platforms raise questions about planning, leases and freeholder consent, as well as insurance, fire safety, noise nuisance, security, and the character of a residential development.
Under London’s current planning rules, a residential property can be used as short-term accommodation for up to 90 nights per calendar year, but enforcing that limit can be difficult. Meanwhile, a national registration scheme for short-term lets is being developed, with the Government expecting it to roll out in 2026.
But what does this mean in practice? Read on to learn how London’s 90-night planning rule works, where lease restrictions come into play, and how short-term lets can create additional operational challenges.
How Short-Term Letting Is Regulated in London
The 90-Day Rule
In London, the 90-night rule, introduced through the Deregulation Act 2015, allows residential premises to be used as temporary overnight accommodation for up to 90 nights per calendar year without planning permission, subject to conditions. If an owner intends to exceed that limit, planning permission will generally be required.
The Greater London Authority’s guidance makes it clear that the 90-night exemption is intended to allow London residents to earn additional income from their homes, rather than to encourage commercial holiday letting.
For property owners and managers, this means establishing the property’s planning position before considering whether leaseholders should be permitted to short-let. Where a leaseholder appears to be operating beyond the 90-night threshold, managers may need to consider whether there is evidence of a potential planning breach, and whether the matter should be referred to the relevant local authority.
Planning Considerations
The Government is planning to launch a national registration scheme for short-term lets across England, due to roll out later this year. Alongside this initiative, new planning rules are in the works to give local councils more power over when a property requires official planning permission for short-term stays.
Local authority enforcement
Enforcement remains one of the most difficult aspects of short-term let regulation. In 2024, London Councils found that at least 11% of short-term lets appeared to exceed the 90-day limit, warning that the true figure was likely higher due to a lack of data.
For managers, this reinforces the value of proactive monitoring. Where a freeholder or management company suspects unlawful short-term letting, keeping a record of complaints, listings and relevant correspondence can provide a more robust evidence trail should an issue come to light.
Lease Restrictions and Freeholder Consent
A common misconception is that because London law permits up to 90 nights of short-term letting without planning permission, a leaseholder automatically has the right to let their flat as short-term accommodation. This is not the case.
Guidance from the Leasehold Advisory Service states that leases can prohibit subletting altogether, or require written permission, restrict the type of subletting permitted, or impose minimum tenancy periods. It also highlights clauses such as “private residence only”, which prevent Airbnb-style holiday lets.
Common lease clauses
For property managers, the important question is not whether a lease mentions short-term letting, but whether the wording is compatible with how the property is being used.
A clause requiring a flat to be used as a private residence, for example, may be enough to prevent Airbnb-style holiday letting. Restrictions on business use, subletting or causing nuisance can provide further grounds for challenging a short-term arrangement. Some leases may also specify minimum tenancy periods or require the freeholder’s consent.
Property managers should read the lease in context rather than looking for a single “Airbnb clause”. If a resident claims they are entitled to short-let their property, the answer may depend on several provisions working together. Where the wording is unclear, seek professional or legal advice before taking enforcement action.
Building Management and Insurance
The regulatory issue does not stop at planning and lease compliance. Short-term letting can have a direct operational impact on the physical building.
Wear and tear
High guest turnover can mean more frequent use of lifts, entrance doors, corridors, communal lighting and refuse facilities. Even where individual incidents appear minor, the cumulative effect can increase maintenance requirements.
There can also be less obvious operational costs. A building designed around 100 long-term residents may operate differently when some apartments have a constant stream of visitors. Concerns around key safes, access codes, deliveries, luggage, noise and refuse can all create additional management work.
Health and safety risks
Fire safety is especially important. Government guidance says that where paying guests are involved, the Fire Safety Order can apply even when the accommodation consists of a single property and even when a stay lasts only one night. This places greater emphasis on competent risk assessment, appropriate fire precautions and clear emergency information.
A short-term guest may not know a building’s evacuation arrangements, including which entrance to use, where the assembly point is or whether a particular door is a fire exit. Property managers should consider whether existing building procedures remain appropriate during short-term occupation.
Insurer requirements
The Government’s 2026 guidance recommends dedicated holiday-let insurance, public liability cover and buildings and contents insurance suitable for short-term letting.
The management team should understand whether short-term letting affects the block policy, its conditions or premiums. Lease restrictions that prohibit business use or require compliance with insurance provisions can provide an important layer of protection.
Managers should encourage leaseholders to get written confirmation from their insurer and mortgage lender before committing to short-term letting. This will be useful in the event of an audit and may reduce the risk of a dispute.
Financial vs Operational Decisions
The appeal of short-term rentals is clear. In a city like London, owners can often bring in far more nightly income than they would with a traditional long-term lease, especially when major events or peak tourism seasons drive demand.
But gross revenue is not the same as investment return. The financial case needs to account for management fees, platform commissions, cleaning, linen, utilities, consumables, maintenance, furnishing, void periods, compliance, and higher insurance costs.
There is also a significant tax consideration. The Government abolished the Furnished Holiday Let tax regime from 6 April 2025, meaning qualifying short-term holiday accommodation is now subject to the normal residential property income rules rather than the former FHL regime.
Realistic Yield
A property making £200 per night as a short-term let may sound like a lucrative investment. However, at 70% occupancy, the gross annual income would only be around £51,100 before operating costs. If occupancy falls, cleaning and management costs rise, or regulation limits availability, the margin can narrow quickly.
In contrast, a conventional long-term tenancy may provide lower income, but greater predictability and less operational complexity. Investment decisions should be based on net performance and risk-adjusted return, rather than just the highest possible nightly rate.
Hidden costs
There is another cost that is harder to quantify: the effect on the wider asset. Repeated complaints, deterioration of communal areas or conflict between owners and residents can affect the reputation of a development. In a premium London block, this will affect how readily units can be sold or filled by long-term tenants.
The Government has acknowledged that the growth of short-term lets can create challenges around housing availability, affordability and health and safety compliance. For investors, this suggests that short-term letting should be evaluated as a building-level risk, rather than simply a unit-level opportunity.
Property Management Best Practice
Proactive action is key to avoiding disputes with leaseholders who may wish to engage is short-term letting. Westminster’s building-management guidance recommends adopting a protocol for short-term letting.
A good policy should establish whether short-term letting is permitted under the lease, what evidence of compliance is required, whether freeholder consent is necessary, what insurance documentation must be provided, how guest access should be managed, what fire and health-and-safety information must be supplied, how complaints are to be recorded and investigated, and what sanctions or escalation routes will apply to breaches.
For larger portfolios, a central register can make this much easier. Each property can have a compliance record showing whether short-term letting is permitted, whether consent has been issued and whether relevant documentation is current.
Enforcement challenges
Enforcing a lease restriction is rarely as straightforward as flagging up an online listing. Managers need evidence, a defensible process and a clear understanding of the freeholder’s rights.
Westminster City Council’s guidance for building managers and freeholders recommends maintaining a register of properties engaging in short-term letting, reporting known unlawful activity and pursuing clear breaches of lease where appropriate. It also recommends a building-specific protocol setting out expectations for hosts.
Resident concerns
In high-density London developments, the difference between a long-term resident and a succession of short-term guests can be felt throughout the building. A steady stream of unfamiliar visitors can mean more noise, greater use of communal areas, additional wear and tear and security concerns.
Short-term guests may not know the building’s fire procedures, refuse arrangements, parking rules or access protocols. They may also have little incentive to develop the same relationship with neighbours as a long-term resident.
Residents should know how to report suspected unlawful short-term letting, what evidence will support their claims, and what action the management company can realistically take.
Professional oversight
Ultimately, the growing regulatory burden strengthens the case for professional oversight.
The property manager increasingly acts as the point where planning, lease compliance, insurance, fire safety, resident relations and asset protection intersect. That requires more than responding to complaints after an Airbnb listing appears online.
The Government’s proposed national registration system is intended to provide local authorities with information to support enforcement and to help identify the scale of short-term letting. For London and the wider South, professional managers should prepare for a market in which short-term accommodation is increasingly scrutinised rather than treated as an informal extension of residential letting.
Looking Ahead
Short-term letting is unlikely to disappear from London’s property market. The economics remain attractive in certain locations, while visitors, corporate travellers and homeowners all have legitimate reasons to use flexible accommodation. However, the regulatory environment is becoming more sophisticated.
For investors, the lesson is that a strong short-term rental income forecast should never be considered in isolation. Planning status, lease wording, insurance, fire safety, management costs, resident sentiment and the potential impact on long-term asset value all belong in the underwriting process. For freeholders and managing agents, the priority is different: establish clear rules, maintain good records and intervene consistently when problems arise.
As the national registration regime develops and London continues to press for stronger enforcement, property professionals should expect scrutiny to increase rather than diminish. The organisations best placed to manage that change will be those that treat short-term letting not simply as a landlord decision, but as a matter of building management, regulatory compliance and long-term asset protection.
AWH provides specialist property management and surveying for residential developments across London and the South. Our experienced team can help freeholders, investors and residential block owners navigate complex management issues, maintain compliance and protect the value of their property.
