A Short-Term Option for Longer-Term Benefits?
Short-term lets were a hot topic for landlords in 2019 and this is an area which is expected to continue in prominence over the course of 2020. Nationally, ARLA Propertymark estimates that as many as 500,000 private rented homes could soon switch from the traditional private rental market to holiday or short-let accommodation, primarily due to tax and legislative changes in the PRS. And a new report from the letting agents’ regulatory body, in partnership with Capital Economics, revealed that the number of active listings on Airbnb in the UK rose by 33% to 223,000 in 2018 from 168,000 in 2017.
In terms of the reasoning behind these increases, the report outlined that nearly half (46 per cent) of landlords who 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 as a major reason by two-fifths (38 per cent) of landlord respondents. Whilst over a quarter (27 per cent) were encouraged to move towards short-term lets because they thought they could achieve higher rents. The report added that that one in 10 landlords (10 per cent) are likely to consider a switch to short-term lets and 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.
It’s clear that a greater number of landlords are evaluating their property portfolios, large and small, and are – at the very least – looking for ways to reduce associated costs, increase yields and diversify their portfolios accordingly. It’s little wonder that this short-term letting trend is encouraging more and more landlords to further evaluate its potential and integrate this into their portfolios where appropriate. However, as with any area of the BTL landscape, this is not an area to be entered into lightly. Landlords need to seek out good professional advice, complete their due diligence and have a robust support network in place to maximise its potential and negate any risks. And if all the numbers do add up, then a short-term option could provide landlords with longer-term benefits.