This has led to our business development managers (BDMs) frequently being asked questions such as “What’s the difference between an Airbnb and serviced accommodation?” or “What’s the difference between a holiday let and a short-term let?”
While these appear to be pretty straightforward questions on paper, from a lending perspective, we often have differing approaches in terms of risk, policy and criteria for such property types. So, you can fully understand why there may be some lingering confusion within the intermediary community.
Getting into the details of short-term and holiday lets
Speaking more generally, short-term lets and holiday lets provide landlords with flexibility, allowing them to let out their properties on a stopgap basis, without the need for an Assured Shorthold Tenancy. These can be more ‘standard’ short-term lets where the property is occupied by travelling businesspeople, or those in need of a temporary home.
Alternatively, holiday lets have become increasingly popular in the wake of the ‘staycation’ phenomenon, especially due to the continued growth of online platforms that are making it easier for property owners and managers to advertise their rooms or properties to potential guests both domestically and internationally.
With this in mind, it was interesting to see the Office for National Statistics (ONS) explore activity levels through three major online platforms, namely Airbnb, Booking.com and the Expedia Group.
The report showed that, from July to September 2023, there were nearly 2.8 million stays in short-term lets booked through these platforms in the UK. This totalled nearly 28.9 million guest nights with an average of 313,879 guest nights each day.
In the UK, domestic visitors were suggested to have made up 63.6% of guest nights (18.4 million) compared with 36.4% by international visitors (10.5 million); Wales was the UK country with the highest proportion of domestic guest nights (85.3%).
The local administrative units (LAUs) in the UK with the highest number of total guest nights in Q3 2023 were Cornwall (1,586,060), City of Edinburgh (1,157,180) and Westminster (871,900). The LAUs with the highest share of guest nights for each UK country were Cornwall (7.3% of England), City of Edinburgh (26.9% of Scotland), Gwynedd (19.1% of Wales), and Belfast (29.2% of Northern Ireland).
In addition, the most popular LAUs for domestic guest nights were Cornwall (1,311,380), Gwynedd (365,750), and City of Edinburgh (345,000), whereas the most popular LAUs for international guest nights were City of Edinburgh (812,190), Westminster (757,350), and Kensington and Chelsea (389,720).
Meeting the growing demand and interest
These represent some highly significant figures and are amplifying the emphasis on lenders to provide their intermediary partners with a wealth of options for landlords who may be looking towards a variety of property types, all with differing specifications and individual complexities.
Holiday lets and short-term lets form part of the core range from BTL by Foundation, but in addition to this, the growing demand for these properties from a wider range of borrower types has led us to launch a new suite of products from our new ‘Solutions by Foundation’ brand.
For example, we can now consider these short-term and holiday lets for UK landlords with multiple properties under one title – a scenario common when farm cottages have been converted or an individual property that has been divided into short-term lets or holiday let flats.
These specialist properties are an area of the private rented sector (PRS) that will continue to generate interest, questions and enquiries in the wake of sustained demand and the growth of online platforms.
