Landlord Short-Stay Switch May Mean Losing 500,000 Buy to Let Homes
Landlords have switched nearly 50,000 private rented homes into short-stay lets, according to data published in January 2020 by the Association of Residential Letting Agents.
ARLA cautions that one in 10 landlords are thinking about switching to AirBnB style holiday and business lets - meaning 230,000 long-term rented homes could be lost to the market if they all decide to follow through on their plans.
According to the report, this could double to nearly 500,000 homes if landlords who say they are ‘fairly likely’ to make the move do so.
“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,” said ARLA CEO David Cox.
“Unless the sector is made more attractive, landlords will continue to exit the market resulting in less available properties and increased rent costs.”
Reasons for considering the change in the way they let homes include managing a series of changes in the law, ranging from landlord licensing to scrapping tenant fees and an overhaul of the way rental profits are taxed.
Landlords offering short-term lets compute their profits to pay less tax and are outside most of the legal obligations covering tenants in long-term lets. Short-stay lets can also command much higher rents.
“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,” said Cox.
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Investing in a private rented property can be achieved in a variety of ways. Sometimes landlords inherit a property that they then turn over to renting. Sometimes owners of properties become unintentional landlords because they are unable or unwilling to sell a property at the value the market currently dictates.