Sim Sekhon: Short-term thinking and the short-term let market
Academics published a paper last month which addressed the impact of Airbnb on private sector rents in eight French cities. When looking at the biggest cities and investors letting entire homes on a short-term basis, there was a clear significant upward pressure on traditional rents.
This phenomenon shouldn’t surprise British landlords. A report has been published in the UK which details the same trends. ARLA Propertymark, in association with Capital Economics, has been looking at the growth of the short-term rental market and the findings are clear: Although particularly noticeable in the biggest cities, more and more landlords are switching from the traditional rental model to short-term arrangements. Consequently, the availability of properties for long-term rent is declining and, as is the way with all markets, restricted supply and high demand is pushing up rents.
A few months ago, during the election campaign, I questioned the housing policies of the major parties and the lack of long-term, strategic thinking. It seems ironic to me, now, that so many of the reactive legislation changes made to protect the interests of tenants have resulted in the opposite, with many landlords choosing short-term lets as their solution. But just how big is the shift and what is the scale of the possible implications?
Firstly, the short-term let market, mainly driven by Airbnb, has grown very rapidly. There’s been a fourfold rise in London and in Edinburgh, the number of properties listed has tripled in three years. It is estimated that 19 per cent of the UK’s housing has been used for short-term lets. 16% of landlords only offer lets on a short-term basis and just under 3 per cent have made the move from offering traditional tenancies to the short-term model. What’s more, 10 per cent of landlords are thinking about it.
Now obviously, the size of the short term let market isn’t without limits, but while landlords find it advantageous to make the change, they’ll continue to do so. The short-term model is more flexible, regulations are fewer and there’s the potential to increase overall income. That’s why it’s not just private individuals who are making the change. The short-term let market is no longer made up of those who simply let extra space in their own homes. Its suppliers are now from across the spectrum with increasing numbers of commercial landlords entering the sector.
I believe this is something we need to talk about. The trend is detrimental to the interest of tenants, yet Government taxation policies favour this change. Different health and safety regulations also apply, but why should they? If a property needs to be safe and fit for human habitation then, surely, that applies whether the occupants will be living there for a few days or for a few months.
Again, I believe that policymakers need to think through the changes they implement. Rather than sit back, blaming private landlords for exacerbating the housing crisis or pushing rents skywards they should engage the sector in frank, open and productive discussion.
If you’d like to read the full report, you’ll find it here.