According to the latest market analysis from ARLA Propertymark, almost half a million properties could be left unavailable for residents looking to rent, as more landlords exit the market and move into short-term lets due to the raft of legislative changes they have been faced with.
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 33% 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% 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% 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% 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% 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 (4%) who stated they had offered short-term lets on properties they previously used for longer-term rentals.
Exiting the private rented sector
46% 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 38%. 27% 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 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 offer 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.
David Cox, ARLA Propertymark Chief Executive, said: “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.”