A survey by Propertymark found that the number of STLs have risen over the past four years, with three-quarters of respondents in tourist hotspots reporting an increase and a third of those in non-tourist hotspots saying the same.
The report is based on 195 responses, with respondents representing over 2,000 branches.
Overall, 58 per cent of agents saw a rise in STLs in their local area compared to four years ago, while 28 per cent said numbers had remained the same. Some 13 per cent cited a decline in STLs.
Drivers of sector growth
Of those reporting a rise, 38 per cent said the main driver was the transfer of property from the PRS and 34 per cent said investors had specifically purchased a property for short-term letting purposes.
The growth of the market was attributed to a rise in demand for short-term stays during the pandemic as well as tax and legislative changes imposed on landlords.
An increase in rent-to-rent practices, which is when a property is leased for the purpose of subletting, was also cited as a reason for an increase in STLs. Agents said this happened because entrepreneurs looked to cash in on the trend without the commitment or the need for capital to own a property.
Respondents also reported an uptick in house hunters using STLs to trial living in an area before going ahead with a residential or buy-to-let purchase.
Additionally, Propertymark said higher yields, flexibility towards property use and reduced regulation attracted STL investors. For tenants, the ability to enter and exit a tenancy easily or have somewhere to stay during renovations drove demand.
Impact on the market
Overall, the majority of estate agents did not feel the growth of the STL market would have an impact on property sales with 57 per cent saying so. Nearly a quarter felt it would have a positive effect including incentivising investment in second homes, keeping chains moving, and the disposal of STLs leading to increased property supply once investors are done with them.
Some 21 per cent said the impact would be negative. They cited reasons such as anti-social behaviour typically seen with STLs making it harder to sell, properties not being looked after in the same way as the owner-occupier market, and reduced supply as owners hold on to properties for longer to make ends meet. Respondents also said the rise of the market could increase property demand and subsequently prices, making it harder for people to raise a deposit.
Conversely, letting agents generally believed STLs would have a negative impact on the PRS with 69 per cent saying so.
Just over a fifth said there would be no effect on the market and nine per cent said it would be beneficial.
Of those who thought STLs would negatively affect the PRS, the majority cited landlords switching to short-term lets which would in turn put pressure on rents and affordability before eventually putting agents out of business.
