London short-term lets in 2026: five regulatory shifts every operator should be tracking

Five separate pieces of law and policy now shape how a short-let operates in London, and they are moving at different speeds. Some are already in force, one has been abolished, and two are still proposals with no confirmed live date. This is a plain-English map of where each one stands as of 12 July 2026, with the primary source listed at the end so you can check every line yourself. It is market education, not legal or tax advice — verify the live status before you act on any of it.

1. The 90-night cap is the load-bearing rule — and there is pressure to cut it

Under the Deregulation Act 2015, an entire home in Greater London may be let short-term for a maximum of 90 booked nights per calendar year unless the property has planning permission for use as a short let. That planning permission is granted only rarely. Breaching the cap is a planning matter: the statutory maximum fine is up to £20,000 per offence, and platforms can remove the listing.

The political direction of travel is toward a tighter limit, not a looser one. The Mayor of London and several inner-London boroughs have called for the 90-night limit to be reduced to 30 or 60 nights. No reduction has been legislated, so 90 nights remains the operative number in 2026 — but any operator building a model on 90 nights should treat a future cut as a live risk.

2. A national registration scheme is coming — but it is not live yet

The Levelling Up and Regeneration Act 2023 gave the government the power to create a mandatory registration scheme for short-term lets across England. The intention is that every host registers their property, provides safety information, and receives a unique registration number that must be displayed on every listing — giving councils direct visibility of short-let stock and making the 90-night rule far easier to enforce.

The scheme was targeted to go live in April 2026. That target has passed and, as of 12 July 2026, the register has not launched. The go-live date has slipped more than once and the current position is that it is still in development.

3. The proposed C5 'short-term let' planning use class — proposed, not in force

In 2023 the government consulted, in England only, on the 'Introduction of a use class for short term lets and associated permitted development rights'. The consultation ran from 12 April 2023 to 7 June 2023 and proposed a new planning use class, C5 'short term let', defined as:

The proposal paired the new class with two permitted development rights: changing from a C3 dwellinghouse to a C5 short-term let, and changing back from C5 to C3 — both without a full planning application. Crucially, a council could remove the first right by making an Article 4 direction where there is evidence of a local problem. National policy requires an Article 4 direction to apply to 'the smallest geographical area possible', so it could be targeted at specific streets, or even individual properties, rather than a whole borough.

4. The Furnished Holiday Lettings tax regime was abolished (6 April 2025)

The special tax treatment for Furnished Holiday Lettings (FHL) was abolished from 6 April 2025 for income tax and capital gains tax, and from 1 April 2025 for companies within the charge to corporation tax. Short-let income is now taxed as ordinary UK property income, in line with any other let.

• Mortgage and finance interest is no longer fully deductible; relief is now given as a 20% basic-rate tax reduction, the same basis as standard residential lettings.
• New capital allowances claims on new expenditure are withdrawn; existing capital allowance pools are carried forward until exhausted, and replacement-of-domestic-items relief continues to apply.
• On sale, gains fall under standard residential CGT rules; the reliefs FHL owners previously accessed — including Business Asset Disposal Relief at the 10% rate, and rollover relief — are no longer available on that basis.

5. The Renters' Rights Act 2025 — Section 21 abolished, tenancies now periodic

The Renters' Rights Act 2025 received Royal Assent on 27 October 2025. Its first phase commenced on 1 May 2026, abolishing Section 21 'no-fault' evictions and converting assured shorthold tenancies into periodic assured tenancies, with rent payable each period.

There is a transition window for Section 21. A valid Section 21 notice served on or before 30 April 2026 can still be relied on, and a landlord may apply to the court for a possession order up to 31 July 2026 on that basis. Serving a Section 21 notice on or after 1 May 2026 is not permitted and can expose a landlord to a local-authority civil penalty of up to £7,000.

What this means operationally

1. Model on 90 nights of short-let, not 365 — and stress-test what a cut to 60 or 30 nights would do to the plan before you rely on it.
2. Assume a national register is coming: keep booking records, safety certificates and property details in order now, so registration is a form-filling exercise rather than a scramble.
3. Check for a local Article 4 direction at the specific address before assuming any future permitted-development route to short-let use.
4. Treat short-let income as ordinary property income for tax, and revisit financing and structure with an accountant in light of the FHL abolition.
5. If any leg of the operation is an assured tenancy, get advice on possession grounds now that Section 21 has gone — do not assume the old notice route is available.

Sources

• 90-night cap and penalties — Deregulation Act 2015; GOV.UK, 'Short-term use of residential property in London'.
• National registration scheme — GOV.UK, 'Delivering a registration scheme for short-term lets'; Levelling Up and Regeneration Act 2023.
• C5 use class consultation (12 April to 7 June 2023, England) — GOV.UK, 'Introduction of a use class for short term lets and associated permitted development rights'.
• FHL abolition — GOV.UK, 'Clarification on abolition of the furnished holiday lettings tax regime' (effective 6 April 2025; 1 April 2025 for corporation tax).
• Renters' Rights Act 2025 — GOV.UK, 'Historic Renters' Rights Act becomes law' (Royal Assent 27 October 2025; Section 21 abolition from 1 May 2026); House of Commons Library, 'Renters' reform in England'.