Nearly half a million properties could be left unavailable for residents looking to rent in the private rented sector, as more landlords exit the market and move into short-term lets (i.e Airbnb) due to the raft of legislative changes they have been faced with.
Lets look at the scale of the UK’s short-term lets sector and the wider implications on the private rented sector.
Growth in short-term lets
Highlighting the huge growth in the short-term lets sector, the number of active listings on Airbnb in the UK rose by a third (33 per cent) to 223,000 in 2018 from 168,000 in 2017. As to be expected, London has the largest market in the UK, with the number of active listings rising four-fold from 18,000 in 2015 to 77,000 in 2019. Edinburgh has seen growth in short-term lets triple, with 32,000 active listings in the Scottish capital in 2019, up from 11,000 in 2016.
ARLA Propertymark Report reveals 16 per cent of adults have let out all, or part, of their property at least once in the last two years – equating to 8.2 million people. This suggests 4.5 million properties, the equivalent of 19 per cent of the UK’s housing stock, have been used for short-term lets (24.2 million properties).
Tenants will suffer
A key concern with the increase in short-term lets is the impact it’s having on the private rented sector and the tenants who will suffer due to a fall in the number of properties available for long-term rent. Ultimately, if supply in the private rented sector continues to fall, a rise in rent costs will be inevitable.
The findings show 16 per cent of landlords said they only offer short-term tenancies and a further seven per cent offer both short and long term lets. Of the overall landlord population, 2.7 per cent have changed from long-term tenants to short-term lets. If this share is applied to landlords across the country, this equates to 46,000 properties that have already been made unavailable for local people looking for a home. London saw a larger share of people (four per cent) who stated they had offered short-term lets on properties they previously used for longer term rentals.
Exiting the private rented sector
Nearly half (46 per cent) of landlords that offer short-term lets do so to enjoy more flexibility in how they use their property. The assault on the private rented sector over recent years and the burdensome regulations in the long-term letting market was cited by two-fifths (38 per cent). Over a quarter (27 per cent) were encouraged to move to short-term lets because they thought they could achieve higher rents.
Future of short-term lets
One in 10 landlords (10 per cent) are likely to consider a switch to short-term lets, which will have a significant impact on the country’s already stretched housing supply. Landlords with more than five properties in their portfolio are considerably more likely to reduce their offering of long-term lets and replace with the short-term letting model.
Based on the number of landlords considering a move to short-term lets, up to 230,000 properties could be left unavailable for tenants if landlords who said they were ‘very likely’ to move to offering short-term lets were to do so. If this included landlords who stated they were ‘fairly likely’ to make the move, the number of properties rises to 470,000, which is a huge concern, particularly for vulnerable or low-income tenants, who are reliant on the private rented sector.
ARLA Propertymark’s recommendations to limit the impact of short-term lets on the private rented sector:
Carefully consider the impact of any future regulation that may incentivise landlords to start using their properties for short-term lets and thereby reduce housing supply for local people trying to find a home.
Ensure a level regulatory playing field between short-term and long-term lets including protections for tenants and health and safety requirements.
Ensure a level taxation playing field between short-term and long-term lets so there are no advantages for commercial landlords using their properties for short-term lets.
Identify ways to improve enforcement of cases in which commercial landlords are not complying with local planning laws or the 90-day limit for short-term lets in London.
Recognise that the impact of short-term lets on housing supply is not uniform across the country and ‘one size fits all’ regulations are unlikely to be optimal.
Distinguish between using one’s primary residence for short term lets when the property is being under-utilised and commercial landlords renting out entire properties on a full-time basis.
Monitor and track the number of entire properties on sharing platforms by hosts with multiple listings in different areas to inform future policy.
Consider introducing limits on short term letting activities in areas in which there is a demonstrable impact on private rented housing supply.