Licensing of short term holiday rentals

The Licensing Act 2003: a complex legal landscape

Felicity Tulloch

The growth of short-term rental platforms like Airbnb has transformed the global hospitality industry. Offering homeowners and property managers the chance to rent out their properties to holiday-makers and provide a flexible, often more affordable alternative to traditional hotels. However, with their popularity comes the potential for issues to arise and we are seeing an increase in enforcement action taken against property owners by Licensing Authorities.

As we know, the sale of alcohol is a licensable activity and is regulated by the Licensing Act 2003.  It is common for owners to leave welcome gifts in their properties, such as bottles of wine.  Some have fully stocked bars, and some allow people in to provide cocktail masterclasses or butler services for example.  In this article, we will explore what owners of short term holiday rentals should think about when it comes to ensuring compliance with the Licensing Act 2003.

Understanding the Licensing Act 2003

The Licensing Act 2003 was introduced to streamline the regulation of licensable activities in England and Wales. It primarily governs the sale and supply of alcohol, provision of regulated entertainment, and late-night refreshment. The Act applies to various types of businesses, including bars, clubs, restaurants, and other public venues where alcohol is sold, and entertainment is provided.

Licensing is managed through a licensing authority (usually local councils), and businesses wishing to operate in a way that is covered by the act must apply for a premises licence or a temporary event notice (TEN). These licences outline the specific activities that are allowed on the premises, the times and days these activities can occur, and any conditions that might apply, such as noise control measures.

But how does this relate to Airbnbs?

Airbnb and the Licensing Act 2003: key considerations

Airbnbs generally don’t sell alcohol or provide regulated entertainment, so the Licensing Act 2003 might not immediately seem relevant. However, there are a number of scenarios in which short-term lets might fall under the provisions of this legislation.

1. Sale of alcohol

If the Airbnb host provides alcohol to guests during their stay, the premises may require a premises licence under the Licensing Act 2003. This could happen if:

• The host regularly provides alcoholic drinks for guests (e.g., through a small bar or minibar setup).
• The host organises events where alcohol is sold or served (e.g., parties, gatherings, or catered events).

In these situations, the premises may need a licence for the sale of alcohol, even if it is a residential property. It is even the case that if an Airbnb host leaves what they consider to be a ‘free’ gift of an alcohol drink for guests, that this could be considered a sale of alcohol, given that payment is being made for the property.

2. Provision of regulated entertainment

If an Airbnb host offers regulated entertainment on the premises (such as live music, performances, or anything that might be classified as “entertainment”), they may require a licence for regulated entertainment under the Licensing Act 2003. Common examples include:

• Hosting parties or live music events.
• Providing performances or shows for guests.

These activities could trigger the need for a licence, especially if they occur frequently or involve large numbers of people.

The challenges and legal risks for Airbnb hosts

The main challenge for Airbnb hosts is understanding the intersection of different regulations. Many hosts are unaware that their rental activities might fall within the scope of the Licensing Act 2003. This can lead to fines, penalties, or the revocation of a licence if a host operates without the appropriate permissions.

For example, a host who organises a large party or provides alcohol without the correct premises licence could face significant legal repercussions. In some cases, local authorities have imposed hefty fines on hosts who breach licensing rules.

Furthermore, hosts who ignore these regulations may face increased scrutiny from local councils, which could lead to stricter enforcement, including property inspections or the suspension of their listing on Airbnb.

How to comply with licensing requirements

To ensure compliance with the Licensing Act 2003 and any local authority regulations, Airbnb hosts should consider the following steps:

1. Check with Local Authorities: Local councils often have their own regulations regarding short-term rentals. Before listing a property on Airbnb, check with the local authority to determine if any licensing or registration requirements apply.
2. Obtain a Premises Licence (if needed): If offering alcohol, entertainment, or late-night refreshments, hosts should apply for the appropriate premises licence or temporary event notice from their local council.
3. Consult Legal Experts: If unsure about the regulatory landscape, it’s advisable for hosts to consult with legal experts specialising in hospitality law to ensure full compliance.
4. Follow Health and Safety Regulations: Make sure the property meets safety standards, including fire safety, gas safety, and electrical checks. These are often required for both Airbnb listings and premises licences under the Licensing Act 2003.
5. Maintain Records and Documentation: Keep clear records of bookings, income, and any licences obtained. This can help mitigate any potential disputes with local authorities or Airbnb.

Conclusion

The regulation of short-term rentals, such as Airbnbs, continues to evolve in the UK. While the Licensing Act 2003 is not directly aimed at short-term lets, certain activities associated with Airbnbs, like the sale of alcohol or provision of entertainment, may fall under its scope. Hosts must navigate both local council requirements and national regulations to ensure they operate legally.

For Airbnb hosts, the best course of action is to stay informed about local licensing requirements, seek advice from legal experts, and always comply with any licensing obligations to avoid legal risks and penalties. As short-term rentals continue to grow in popularity, it is likely that more tailored regulations will emerge, but in the meantime, a proactive approach to licensing can help ensure a smooth and successful Airbnb operation.

Licensing Law Solicitors