Two regulatory shifts are about to hit London's holiday let market in quick succession. The Deregulation Act 2015 already caps short-term lettings at 90 nights per year, and from April 2025, the tax advantages that made those 90 nights more profitable are disappearing. A national short-term rental register, confirmed for April 2026, will make enforcement significantly easier.
For investors weighing a London purchase, the question is no longer just "can I Airbnb this?" It is whether the numbers work within a 90-night ceiling. The data suggests that for most London properties, they do not.
What Is the 90-Day Rule?
Under Section 44 of the Deregulation Act 2015, any property in Greater London can be used as a holiday let for up to 90 nights per calendar year without needing planning permission. Exceed that and you need to apply for a change of use from your local council, a process that is expensive, slow, and frequently refused.
Platforms like Airbnb enforce this automatically. Once a London listing hits 90 booked nights in a year, it is blocked from accepting further reservations. Fines for exceeding the limit without planning permission can reach £20,000.
The rule applies across all 33 London boroughs, from central Westminster to outer Bromley.
What Does the Market Data Show?
London's property market is notoriously expensive, but short-term rental returns vary enormously depending on area. Here is a snapshot of estimated figures for 3-bedroom houses across the capital.
Estimates based on 3-bedroom houses. Figures are modelled from registry, listing, and market data, not guaranteed outcomes.
Take the London median: a 3-bedroom house estimated at around £758,000 can command roughly £213 per night on Airbnb. But with the 90-night cap, the most you could gross from short-term letting is about £19,170 per year. After management fees (typically 18% for holiday lets) and the platform host fee (3%), net income drops to roughly £15,100.
Compare that to a standard long-term tenancy at around £2,200 per month, or roughly £26,400 per year. Even after a 10% letting agent fee, that is about £23,700 net. The long-term option pays roughly 57% more, with far less operational hassle.
The exception is high-demand areas like Shoreditch, where a nightly rate of around £284 and occupancy above 70% could make 90 nights competitive, grossing roughly £25,600 in those 90 nights alone. But these areas are the minority, and they come with purchase prices to match.
The Furnished Holiday Letting Tax Regime Is Gone
Until April 2025, holiday let owners in the UK benefited from a separate tax regime called the Furnished Holiday Lettings (FHL) scheme. This allowed them to claim capital allowances on furniture, deduct mortgage interest as a business expense, and access Business Asset Disposal Relief for lower capital gains tax on sale.
From 6 April 2025, the FHL regime was abolished. The government stated the change would "remove the tax advantages that landlords who offer short-term holiday lets have over those who provide standard residential properties."
In practical terms, London holiday let owners now face the same tax treatment as any other buy-to-let landlord: mortgage interest relief is capped at the basic rate, capital gains tax applies at the standard residential rate, and there are no capital allowances on furnishings.
A National Short-Term Rental Register Is Coming
Tourism Minister Sir Chris Bryant confirmed in 2025 that a national register for short-term rental properties will go live in April 2026. The register will require hosts to declare their rental frequency, provide ownership details, and show safety certifications.
For London, where the 90-day rule has historically been difficult to enforce across 33 boroughs, the register is expected to give councils significantly better tools to identify properties exceeding their allocation.
The scheme will be initially voluntary before becoming mandatory. Further reforms, potentially including the power for councils to set lower night caps, are expected after the register is established.
What This Means for Investors
London remains one of the world's strongest rental markets. Long-term demand is enormous, vacancy rates are minimal, and rents have grown steadily. But for investors specifically interested in short-term letting, the regulatory trajectory is clearly tightening: a hard night cap, removed tax advantages, and incoming registration requirements.
Some investors consider a hybrid approach, letting on Airbnb for 90 nights during peak summer months, then switching to a medium-term let (1-6 months) for the rest of the year. Whether that covers the additional costs of furnishing and higher management fees depends heavily on the area.
Explore London rental data on the dashboard
This information is for educational purposes only and should not be considered financial or legal advice. Regulations and market conditions change frequently. Verify current rules with local authorities before making investment decisions.