Long-Term Lettings Market Loses 500,000 Homes
Nearly half a million properties could be removed from the long-term lettings market as disenchanted landlords move to short-lets.
A survey by the ARLA Propertymark, in partnership with research consultancy Capital Economics, has been published to take the lid off the UK’s short-term lets sector and its implications for the private long-term lettings market.
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.
The 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.
ARLA says 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 to the long-term lettings market.
Ultimately, if supply in the private rented sector continues to fall, a rise in rent costs will be inevitable warns the association.
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. 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.
Nearly half (46 per cent) of landlords that offer short-term lets do so to enjoy more flexibility in how they use their property.
What ARLA describes as 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.
One in 10 landlords is 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.
“The growth in short-term lets is particularly concerning for the traditional private rented sector. As landlords are continuously faced with increased levels of legislation, it’s no surprise they are considering short-term lets as a chance to escape this. Unless the sector is made more attractive, landlords will continue to exit the market resulting in less available properties and increased rent costs” explains David Cox, the chief executive of ARLA.
ARLA has issued a series of recommendations to limit the impact of short-term lets:
– 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.