As a letting agent, you will have certainly noticed an increase in properties becoming short-term lets in recent months.
Data collection service STR found that in June 2021, London’s short-term let revenue had increased by 59.5% year-on-year
Airbnb, one of the biggest platforms for short-term lets, has grown in popularity significantly since it first emerged in the UK in 2009. It appeals to landlords as there are less restrictions and more potential for profit – as long as they can keep the property regularly booked up.
There has been an increase in demand for UK ’staycations,’ with holidays abroad still difficult for a lot of people because of travel restrictions, uncertainty and isolation periods. This has made holiday lets like Airbnbs much more popular which has led to landlords deciding to transform their properties into short-term lets to take advantage of this.
Why this is bad for the private rental sector
With rental properties in very high demand at the moment, a lack of supply is already a major issue for a lot of letting agents right now, with more potential tenants than properties available.
Landlords taking their properties off of the long-term letting market is accelerating this issue, and putting more strain on the market.
It is also obviously a problem for tenants, as they face extra competition for properties, and potentially more expensive rents – with landlords able to charge more due to the low supply in relation to demand.
What can be done?
As the problem worsens, many in the PRS are calling on the government to take action and bring in restrictions on holiday and short-term lets to prevent further landlords making the switch. Councillor Tim Dwelly of Cornwall, having seen a decrease in rental properties available in the area, is looking to propose a motion to the council in an attempt to reduce the impact of the issue. He has suggested eight measures to be put in place, including higher council tax on second homes and PRS reforms.
In Edinburgh there are also proposed measures to crack down on short-term lets, following the news that over a third of short-term let properties in Scotland are in Edinburgh.
The council wish to create a control area across the whole city where property owners must first get planning permission before being able to use their property as a short-term let.
Another main reason forcing a lot of landlords to consider leaving the long-term PRS, is the abundance of restrictions in place – from the tenant fees act to eviction bans – there have been many limitations placed upon landlords in recent years, making it more difficult and less profitable for them.
A reduction in restrictions on landlords may help see a decrease in the amount looking for a way out of the sector, and could even encourage some who have left to return.
To discourage landlords from leaving the long-term PRS, letting agents can look to services such as rent protection or void management, which assist landlords, and are instrumental in reducing workload and stress.
Three reasons for letting agents to remain positive about the future
Although short-term lets are having a detrimental effect on the amount of properties available for long-term lets, there are a few reasons to remain optimistic about the problem slowing down.
As our Rental Index shows, rent prices in the UK are increasing, with June 2021 being the first month on record average rent climbed above £1,000, and average rent increasing further in July.
This is promising for landlords as higher average prices means they have the potential to earn more, which should contribute to landlords of long-term lets remaining in the sector.
In addition to this, as the Covid situation around the world continues to improve, more people will return to holidaying abroad, which will cause a drop-off in demand for UK holiday lets. This could gradually see landlords returning to long-term lets if the profitability and interest of short-term lets decreases.
A final reason to remain positive that the situation will improve with time is the government’s plans for a rental reform later on this year. After a very hectic past few years, having a more structured, consistent sector will reduce stress for landlords.