Recent legislation has pushed more buy-to-let owners towards short-term lets, with 50,000 properties estimated to now be unavailable for long-term tenants, trade body ARLA Propertymark found.
The number of active listings on Airbnb in the UK increased by a third to 223,000 in 2018 from 168,000 in 2017, the research produced with Capital Economics showed.
Around 16 per cent 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 per cent have changed from long-term tenants to short-term lets – this equates to 46,000 properties made unavailable for local people looking for a home.
In London the issue is bigger, with four per cent of investors now offering short-term lets over homes previously used for longer term rentals.
And in the capital, the number of active listings on Airbnb jumped four-fold from 18,000 in 2015 to 77,000 in 2019.
In Edinburgh short-term lets tripled in just three years, with 32,000 active listings in 2019, up from 11,000 in 2016.
Tenants will suffer
Nearly half of landlords said that short-term lets give them more flexibility in how they use their property.
However, burdensome regulations in the long-term letting market was cited by two-fifths as the reason for offering holiday homes.
More than a quarter were encouraged to move to short-term lets because they thought they could achieve higher rents.
ARLA said that ultimately, if supply in the private rented sector continued to fall, a rise in rent costs would be inevitable.
Future of short-term lets
One in 10 landlords said they were likely to consider a switch to short-term lets.
As a result ARLA estimated up to 230,000 properties could be left unavailable for tenants if landlords who said they were ‘very likely’ to move to offering short-term lets did so.
Including landlords who stated they were ‘fairly likely’ to make the move, the number of properties rises to 470,000.
ARLA said this is a “huge concern”, particularly for vulnerable or low-income tenants, who are reliant on the private rented sector.
Landlords with more than five properties in their portfolio are considerably more likely to reduce their offering of long-term lets and replace with shorter term lettings, the report showed.
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 fewer available properties and increased rent costs.”
The Residential Landlords Association argued the tax system favours holiday homes over the provision of long-term homes for private rent.
For example, the government has almost completed the process of restricting mortgage interest relief for landlords to the basic rate of income tax, but this measure does not apply to furnished holiday lets.
David Smith, policy director for the Residential Landlords Association, said: “Today’s report highlights how inconsistent the government’s approach to the rental market now is.
“On the one hand the Ministry of Housing wants to encourage more landlords to offer properties to tenants on a long-term basis. On the other hand the Treasury has a tax system which makes renting out holiday homes more appealing at a time when demand for homes to rent is outstripping supply.”