In Suffolk and Norfolk alone, it is estimated that over £4.65 billion each year is generated for the local economy by tourism. More and more property owners are therefore considering the possibility of converting their property into holiday accommodation to generate additional income.

Converting a residential property into holiday accommodation is relatively easy and many of the physical alterations required are purely internal and so often do not need planning permission.

Planning permission cannot be completely ignored however and if a property is listed then listed building consent is usually required even for internal works. In addition, anyone tempted to covert their property should also be aware that planning permission is not just needed for external works to buildings but is also required when a material change of use of the property takes place.

Rather unhelpfully there is no comprehensive guidance about what a "material change of use" actually means. Establishing what constitutes a “material change of use” has therefore been a popular topic of debate in the Courts, which have recognised that the answer to this question is not as clear cut as one might like.

The need for planning permission for holiday lets has been considered recently by the Court of Appeal in a local case that involved the conversion of St Audry’s Hospital in Melton, Woodbridge, Suffolk.

St Audrey’s was an extensive hospital complex and, following its closure in 1993, planning permission was granted to part-develop the property for a mix of residential and other uses.

The owner of St Audry’s House subsequently converted the building into an eight bedroom house (plus a studio used as a ninth bedroom) pursuant to a further planning permission. Following the conversion, the property was let on short term holiday lets for up to 18 people.

The Court heard evidence of that the property was occupied for up to 175 nights a year and regular visitors included a yoga group, a cycling group and others who came for reunions, parties or other celebrations.

All was fine until November 2010, when the local council issued an enforcement notice against the use of St Audry’s House as “commercial leisure accommodation”. The council’s view was that there had been a material change of use from a residential property to a more commercial use for leisure accommodation more like a hotel. The owner was given 6 months to stop the lettings or face prosecution.

The owner appealed the issue of an enforcement notice on numerous grounds but the planning inspector upheld the terms of the enforcement notice and dismissed the appeal. The owner then appealed again to the High Court where she was again unsuccessful. Undeterred, she appealed one more time to the Court of Appeal.

In the Court of Appeal the owner argued that the lawful use of a residential property not only includes occupation by an individual or a family as a permanent residence but also extends to the use of the property for temporary or holiday occupation.

The Court of Appeal rejected the owner’s arguments. Whilst the Court agreed that holiday accommodation could, in some circumstances, fall within the same class of use as a residential property, it would depend on the particular facts of each case as to whether holiday lettings fell within that residential use or whether they were of such a degree as to be of a more commercial nature.

On the facts, the Court agreed with the planning inspector and dismissed the appeal, concluding that the change of use of St Audry’s House for commercial holiday lettings was a material change of use. Following the hearing, the Court has ordered the owner to cease her holiday lettings business unless and until she is granted planning permission for a change of use.

In the absence of hard and fast rules about the amount of commercial letting that can take place before a home becomes a business, it is always prudent to seek professional advice before embarking on a project. Further, with different taxation issues arising depending on whether you are running a business or not, the consequences of falling the wrong side of the line can be even more severe.