Lettings expert sounds Airbnb warning to landlords
A rental market expert is urging landlords to be cautious when considering to use short-term lets websites such as Airbnb to rent out their properties.
David Alexander, managing director of Apropos and DJ Alexander, says challenging conditions may encourage landlords to view short-lets as an ‘easy way out’.
He cites Airbnb’s most recent figures, which show the platform has almost 225,000 active UK listings and generates over £850 million in rental payments, with the average landlord or property owner taking home £3,100 per year.
Figures for some of the UK’s biggest cities suggest much more lucrative returns, with a typical takeaway of £3,563 per month in London, £1,959 in Edinburgh and £1,595 in Manchester.
“These numbers will appear very attractive to landlords who have falling rents in real terms, lower tax incentives, and increased management and maintenance costs,” says Alexander.
The rental expert highlights the advantages of short-term letting such as higher daily income, fewer legislative, financial and regulatory issues and potentially less punitive borrowing circumstances.
Alexander says the disadvantages for landlords choosing to let on a short-term basis include longer void periods, higher maintenance costs and considerable political pressure on a market which has been banned or restricted in other parts of the world.
“With [sites like] Airbnb you may find that you make more money for the peak five or six months of the year, but the winter is completely dead in which case your earnings may balance out,” he says.
“The problem is that there is more work involved in dealing with 50 guests a year than in two permanent clients staying for a year.”
“It is a balance and will depend on your expectations, your current experience of where your property income is going, and your location.”
According to Alexander, Airbnb’s data shows four key listings areas in the UK: London, Scotland, the South West and the South East – which collectively account for just shy of 75% of all listings on the platform.
Meanwhile, these four areas account for 78% of all income generated for UK hosts.
“These figures highlight the importance in short-term letting of having a rental property in the right area,” he says.
“These are a lot of factors to consider so I would urge landlords thinking of this step to think long and hard before making a leap into the unknown. It will work for some but could be a mistake for others.”
“Equally many landlords could substantially improve their earnings by reviewing their portfolio,” adds Alexander.
“There is still a very good return to be made from the PRS, but it requires a professional approach.”
The growth of the short-term lets market and how it affects long-term private rental accommodation has again been in the spotlight in recent months.
In April, the Mayor of London, Sadiq Khan, penned a letter to Secretary of State for Housing, Communities and Local Government, James Brokenshire, calling on the government to introduce a new registration system for anyone wishing to let a property for less than 90 days in a calendar year.
The letter was co-signed by Airbnb and several London borough councils.
“Short-term lets are a benefit to visitors to London, and to Londoners themselves who want to earn a little extra money. But these benefits must be balanced with the need to protect long-term rented housing, and to make sure neighbours aren’t impacted by a high turnover of visitors,” wrote Khan.
“It is now time for the government to work with us to develop a registration system of short-term lets, so local councils can make sure we get this balance right.”