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. 

The Department for Levelling Up, which last year announced a routine review of Homes England, said the rules on holiday lets are being introduced “to protect communities and keep homes available” and means “local residents will be protected from being pushed out of their communities”.

Under the reforms, councils will be given greater power to control short-term lets by making them subject to the planning process. Ministers said this will support local people in areas where high numbers of short-term lets are preventing them from finding housing they can afford to buy or rent.

Under the rules, homeowners will still be able to let out their own main or sole home for up to 90 nights per year.

The changes are part of a long-term plan to prevent a “hollowing-out” of communities and address anti-social behaviour.

Mandatory national register

Under the rules, a new mandatory national register will give local authorities the information they need about short-term or holiday lets in their area. This will help councils understand the extent of short-term lets in their area and the effects on their communities, and underpin compliance with key health and safety regulations.

Michael Gove, secretary of state for levelling up housing and communities, said: “Short-term lets can play an important role in the UK’s flourishing tourism economy, providing great, easily accessible accommodation in some of the most beautiful parts of our country.

“But in some areas, too many local families and young people feel they are being shut out of the housing market and denied the opportunity to rent or buy in their own community.

“So the government is taking action as part of its long-term plan for housing. That means delivering more of the right homes in the right places, and giving communities the power to decide.

“This will allow local communities to take back control and strike the right balance between protecting the visitor economy and ensuring local people get the homes they need.”

Amanda Cupples, general manager for Northern Europe at Airbnb, said: “The introduction of a short-term lets register is good news for everyone. Families who host on Airbnb will benefit from clear rules that support their activity, and local authorities will get access to the information they need to assess and manage housing impacts and keep communities healthy, where necessary.

“We have long led calls for the introduction of a host register, and we look forward to working together to make it a success.”

The proposed planning changes would see a new planning ‘use class’ created for short-term lets not used as a sole or main home. Existing dedicated short-term lets will automatically be reclassified into the new use class and will not require a planning application.

The government also intends to introduce associated permitted development rights – one allowing for a property to be changed from a short-term let to a standard residential dwelling, and a second that would allow a property to be changed to a short-term let. Local authorities would be able to remove these permissions and require full planning permission if they deem it necessary.

Both of these measures are focused on short-term or holiday lets, and therefore the planning changes and register will not affect hotels, hostels or B&Bs.

This comes after HMRC’s tax crackdown on side hustles, including Airbnb, earlier in the year.

The move is aimed at putting homeownership within reach of more first-time buyers by restricting the number of holiday lets.

Leeds plans to enter pilot scheme partnerships with councils to restrict holiday let lending, as Richard Fearon, chief executive of the Building Society, explained: “Our purpose is to put homeownership within reach of more people, generation after generation, and the volume of holiday lets in some parts of the country can be a big barrier.”

“We want to remove that obstacle. Mortgage lenders can be a valuable partner to local authorities seeking greater control over the growth of holiday lets.

“Entering a partnership will help find the balance between the significant role holiday lets can play in local economies and the detrimental impact they can have on housing for residents.”

Priced out

The lender noted that first-time buyers are widely priced out of the market due to house price inflation, the need to save a large deposit and current higher rates.

Underlying this is the severe shortage of supply of homes, but the mutual also pointed to the explosion of second homes and holiday lets.

Generation Rent recently found that the growth in holiday lets and second homes is nearly cancelling out the supply of new homes in some parts of the country.

In Copeland, Cumbria, for example, the growth in holiday homes accounted for 96 per cent of total homes added to the housing stock, for example.

Taking action

Last year, Leeds Building Society stopped lending to homebuyers looking to purchase a residential second home and now it wants to go further, limiting new lending on purchases of properties to be used for holiday lets.

Fearon explained: “Earlier this year we began discussions with local authorities to restrict new mortgage lending on holiday lets in areas where they feel those negatives outweigh the positives.

“Our proposal is for a 12-month pilot scheme, to assess the impact before seeking to extend to other areas.”

Existing Leeds Building Society holiday let mortgage customers would be unaffected by any changes, with only new lending to be restricted during the pilot schemes.

In its F1 tier which is open to borrowers with an almost clean credit history, the lender has added a limited edition product fixed for two years. This is available up to 70 per cent loan to value (LTV) with a 3.5 per cent fee and has a rate of 5.94 per cent. 

Within the same range, the lender has reduced two-year fixed rates by up to 0.35 per cent. Pricing now starts at 6.94 per cent for its product at 65 per cent LTV with a 1.5 per cent fee. 

Across Foundation’s F2 tier which is for borrowers financing against a specialist property or those with historical blips on their credit rating, rates have been cut by up to 0.35 per cent to start from 7.09 per cent. 

For a standard houses in multiple occupation (HMO) product, the two-year fixed rate up to 65 per cent LTV has a rate of 7.19 per cent after a 0.25 per cent reduction. The option at 75 per cent LTV has been cut by 0.2 per cent to 7.29 per cent. Both products have a 1.5 per cent fee. 

Foundation has cut rates on short-term let products including its 65 per cent LTV two-year fix which is now 7.34 per cent, down from 7.49 per cent. The 75 per cent LTV option is now 0.1 per cent lower at 7.44 per cent. Both have a 1.5 per cent fee. 

Foundation Home Loans, the intermediary-only specialist lender, has today refreshed a number of two-year fixed rates within its Core buy-to-let product range.  

In its F1 tier – for borrowers with an almost clean credit history – Foundation is also launching a new Limited Edition, two-year fixed-rate buy-to-let product, available up to 70 per cent LTV, priced at 5.94 per cent with a 3.5 per cent fee.  

Tom Jacob, director of product and marketing at Foundation Home Loans, said: “We continue to take the opportunity to review and refresh our core buy-to-let product range and this week we are able to make some significant price cuts in both the F1 and F2 ranges, plus for both standard HMOs and short-term let products. 

“This is an important time of the year for many landlord borrowers, particularly those who are looking for refinance options in the current market. These new and refreshed buy-to-let products provide a further range of rate options.” 

He added: “Foundation is fully committed to the buy-to-let product space and we would urge advisers to contact our sales team to see how we can support their business in this important area.” 

Accord reduces buy-to-let rates 

Accord Mortgages has reduced rates on its buy-to-let products by up to 0.46 per cent. 

Its two-year fixed mortgages have seen the largest reduction while three-year fixes have been cut by up to 0.16 per cent and five-year fixes have been lowered by up to 0.35 per cent. 

For example, there is a two-year fixed purchase product at 60 per cent LTV with a rate of 5.64 per cent, while at 75 per cent LTV the rate is 5.84 per cent. 

Also for purchase, a five-year fix at 60 per cent LTV has a rate of 5.24 per cent and the corresponding product at 75 per cent LTV has a rate of 5.44 per cent. 

All products have a £1,995 fee, offer a free standard valuation and £500 cashback. 

Aidan Smith, buy-to-let mortgage product manager at Accord, said: “We’re delighted to be able to once again seize a market opportunity to reduce rates across our buy-to-let product range and so support landlords managing amidst the ongoing cost squeeze. 

“As a leading buy-to-let lender, we remain committed to doing everything we possibly can to support this segment in providing both a vital service to private tenants, and an important prop for the housing market at large.” 

Products have also been repriced, which the lender said “reflect the market”. 

The lender withdrew its products at the end of last month, citing the “increased cost of funding” sparked by a rise in swap rates over the previous weeks. 

The relaunched products include its residential cashback and fee saver options, as well as two and five-year products with rates starting from 6.19 per cent with a £995 fee. 

Across its core buy-to-let products, its five-year fix at 75 per cent loan to value (LTV) has rates starting from 5.49 per cent, while its two-year fixes begin from 5.94 per cent. 

There are also products for houses in multiple occupation (HMO), expats, holiday let and short-term let. The expat product rate is 6.74 per cent while the holiday and short-term let rate is 6.84 per cent. 

Steve Griffiths (pictured), chief commercial officer at The Mortgage Lender, said: “In challenging market conditions we are pleased to be able to ensure minimal disruption to intermediaries and their customers by allowing a realistic submission window for our withdrawn products, followed by a timely full release of our repriced range.   

“We remain committed to providing our broker partners access to competitive mortgage deals and the ability to offer their clients attractive and suitable products combined with outstanding service delivery.” 

Santander raises product transfer rates

Santander will increase rates across all its residential and buy-to-let product transfer fixed rates by between 0.05 per cent and 0.33 per cent. 

This will apply from 8 June. 

It will also be removing its five-year fixed buy-to-let remortgage at 75 per cent LTV, which has a rate of 4.59 per cent and a £3,999 fee. 

Applications for outgoing rates will be accepted until close of business today. 

During a House of Commons debate on planning permissions in the holiday let market, Tim Farron MP said: “There isn’t a housing crisis but a housing catastrophe”. 

Farron said there were three reasons for the ‘catastrophe’: the lack of genuinely affordable housing being built; “excessive numbers” of second homes that had “gobbled up” full-time residences; and a “short-term rented sector that has gobbled up the long-term rented sector”. 

He said in his constituency of Cumbria, the stamp duty holiday led to 80 per cent of transactions being second home purchases. He said it also resulted in long-term private rented residences “collapsing” into Airbnb with landlords evicting their tenants, “largely because the government did not scrap Section 21 at the time”. He said many of these evictees had nowhere else to go due to a lack of available properties. 

Farron said a fairer housing market would need ambitious regulation but added that the problems were avoidable and fixable. 

He added: “Short-term lets need to be a separate planning use so local authorities can make sure there are enough homes.” 

Housing minister Rachel Maclean said the government was consulting on the introduction of a new use class which would result in a reclassification of all dwellings without the need for a planning process. There is also a proposal related to people letting out their main or sole home, as there is currently no defined limit regarding the number of days, which Maclean said could “lead to uncertainty”. 

She said planning permission would be needed for those who wanted to let their homes out for longer than the defined limit. 

The consultations close on 6 and 7 June which Maclean said was “generating a fair amount of interest”. 

A register of short-term lets will also be introduced through the Levelling-up and Regeneration Bill, which Maclean said would help local authorities manage the supply of short-term lets. 

Better investment opportunities 

Simon Jupp, MP for East Devon, said in his constituency, local people were being priced out of homes that were often sold to cash buyers from elsewhere within days of coming to market. 

Derek Thomas, MP for St Ives, said landlords had been tempted by the incentives attached to switching from long-term rental properties to holiday let, adding “one in 10 holiday companies were previously registered as buy-to-let businesses”. 

He said this meant it was also the responsibility of the Treasury to remedy this as current tax burdens made holiday lets more attractive.  

Thomas added that the lack of confirmation around minimum energy performance certificate (EPC) ratings was also prompting landlords to make the switch before legislation came in. Additionally, he said there was a lack of clarity around properties which will never be able to reach minimum EPC standards and whether they would be exempt from any rules.

He said: “Can the minister [Maclean] work with her colleagues in the department for net zero to provide certainty and clarity both in relation to EPC standards for long lets, and the review of the EPCs themselves?” 

Referencing the Renters’ Reform Bill, Thomas said the Department for Levelling up had increased protections for rental tenants but needed to balance this with protections for landlords to prevent them from moving to holiday let. 

He added: “Can the minister assure my constituents that private landlords are a valuable part of the solution to the housing crisis and the government will be ensuring that they are not replaced by holiday let businesses?” 

Matthew Pennycook, MP for Greenwich and Woolwich, said London had been particularly affected by the rule introduced by David Cameron’s government in 2015 which allowed properties to be let for up to 90 days a year without the need for planning permission. He said the government was warned at the time that this would have “harmful consequences”, adding: “but those warnings went unheeded, and short-term let abuse is now rife in many parts of the capital as a result”. 

Pennycook said the deregulated nature of the short-term letting sector was “deeply problematic” and said current measures were “insufficient”. 

Things are being done 

Anthony Mangnall, MP for Totnes, said the government had already changed legislation around holiday lets in “quite an effective manner” such as the amendment to business rates which determines how long properties must be let for to be relieved of the tax, to increasing council tax rates to 200 per cent on empty properties and second homes, as well as a review of how neighbourhoods are planned. 

He added: “There is a large body of legislation that isn’t just being promised, but has already been delivered.” 

He said it was not correct to say nothing had changed but asking for more houses meant more needed to be built, as changes to holiday let alone would not address the lack of housing. 

Mangnall said it was also about encouraging investment from landlords, adding: “We have to have measures that will encourage long-term landlords who will put their properties into the market and make them available for people to be able to rent.” 

Brokers said that whilst there were a lot of lenders who did standalone holiday let mortgages, the landscape was more limited for residential mortgage borrowers who wanted to use Airbnb on their own residence.  

According to Criteria Brain, there are 14 lenders that allow residential borrowers to let a room through services like Airbnb or similar.  

Specific criteria 

Joe Stallard, director and adviser at House and Holiday Home Mortgages, said of the few lenders that allowed short-term letting on a borrower’s own home it was normally restricted to certain loan to values (LTVs) and permitted 90 to 120 days of letting. 

Consumer interest in short-term letting has increased recently, as Stallard said: “It’s an enquiry type that we have seen a rise in recently, however, it does pose a problem for lenders as it blurs that boundary between residential and commercially-focused products. 

“Using Airbnb effectively isn’t as simple as taking a few photos and creating a listing. Take the time to understand the platform – that means the risks involved, as well as the potential benefits.” 

He said it was best for borrowers to make lenders aware and seek prior approval. Stallard also stressed the importance of securing the right home insurance policy. 

Chris Sykes, technical director at Private Finance, said: “I think what Airbnb is trying to do here is encourage more high street lenders to allow people to Airbnb their home or part of it for a limited time of the year.”  

He said this could be if they have an annex or converted part of their home.  

“There are lenders that allow this, but there are usually some occupancy restrictions – for example, they will only allow it for up to 90 days per year – but it generally makes sense especially in a time of growing affordability concerns,” Sykes added.  

A higher risk attached 

Sykes continued that when he asked lenders why they do not allow Airbnb-like arrangements but would permit lodgers, they say there is a higher risk. 

“Often a homeowner wouldn’t be adequately insured through their buildings and contents insurance if something happened while a property was let or part let on Airbnb. There hasn’t really been much development in this space in the last couple of years, but it’d be great if there was. It would give borrowers more flexibility,” Sykes said.  

Nicholas Mendes, mortgage technical manager at John Charcol, said that it was becoming “more common” for homeowners to consider sites like Airbnb to let their property on a short-term basis.  

He continued: “The flexibility as well as the potential earning are the biggest draws to homeowners. Circumstances that often drive these opportunities include a change in the relationship dynamics and looking to move in to working in a different location or looking to earn a couple of hundred pounds in the short term.  

“Short-term letting sites offer homeowners the ability to earn without going into the worries of being a landlord.” 

He added that it could be more popular for clients in London, city centres and “desirable retreat locations” to let through Airbnb rather than a buy to let, and in his experience, they will bring it up during the application process.  

He said: “There is an overwhelming majority of both residential and buy-to-let lenders who will not consider properties to be let via Airbnb.  

“The key thing for lenders, especially those that lend on holiday lets, is that they either do not understand the benefits of using Airbnb or they do not have the ability to adapt to a changing market, which is proving to be strong.”

Mendes said that prospective buyers need to think about lenders, check for restrictions, review insurance, price point and tax.  

He added that borrowers with a residential mortgage need to make sure they rent out a room on a short-term basis and so do not need to declare it to a lender; that they you are living in the property for the majority of the year and that if the let is for more than 90 days, they get consent to let from the lender. 

Borrower misconception 

David Robinson, co-founder at Wildcat Law, said setting up an Airbnb may seem like a good idea at first, but many realised it was not a ‘simple’ way to earn more money. 

He added: “Mortgage lenders do not like Airbnb as it introduces additional risk to their security and, frankly, they know that many people go into this without fully understanding the risks. For example, most standard house insurance policies will not cover Airbnb activities so a specialist policy will be required or it will be necessary to take out short-term policies to cover the periods of letting.   

“Then there is the tax implication, especially if the whole property is let out rather than just a room. In addition to a self-assessment return, many may need an accountant to help with their return.” 

Andy Soye, director of Holiday Cottage Mortgages said there was a “massive difference” between renting a room on Airbnb and renting a home on Airbnb as they were “completely different scenarios”. 

He said: “They either do it deliberately and operate a home as a furnished holiday let getting all the benefits that such status provides, or not at all. It’s very difficult to both live in a property and sometimes rent it out entirely – what do you do with all your personal things, for example?  

“There are lots of important legal and health and safety issues that must be in place too – carbon dioxide detectors, fire assessments and so forth plus on-call support needs to be arranged. For these reasons, it’s not common for a homeowner to move out for a week and let their house.” 

Soye said renting out a room and remaining present in the home tended not to be an issue for lenders, however, noting that this activity was promoted by the government. 

“Personally, I think lenders have made it quite clear that if you want to fully short-term let your property, you need a holiday let mortgage as that product has been designed and risk modelled by the lender to match the holiday letting activity profile,” he said. 

Research commissioned by Airbnb from a sample of 2,000 homeowners found that 77 per cent of people were looking for ways to boost their income to cover rising mortgage rates and living costs. 

Almost half  (47 per cent) said they would list their home or a room on a short-term lettings platform such as Airbnb, but two fifths said their lender did not allow this. 

Metro Bank and Barclays are among two of the lenders which allow borrowers to rent their homes on short-term lettings platforms for up to 90 days a year but other lenders do not. 

There is also the government’s Rent a Room scheme which allows homeowners to earn £7,500 tax-free each year for taking in a lodger. However, Airbnb said a lack of clarity from lenders meant many borrowers did not know what they were permitted to do. 

“A win for mortgage providers”

Airbnb said a third of hosts on the platform used the income to manage the rising cost of living. The typical hosts earns £6,000 a year. 

Bim Afolami MP, chair of the All Party Parliamentary Group on Financial Markets and Services, said: “Allowing homeowners the flexibility to occasionally let out their property as a means of earning some extra income is a clear win for mortgage providers and could provide an important lifeline to those who might be struggling in these difficult economic times.  

“Banks and building societies can follow the example of lenders who are offering flexibility to their customers and allowing them to take up the benefits of home sharing.”  

Amanda Cupples, general manager for Northern Europe at Airbnb, said: “With mortgage rates and inflation continuing to climb in the UK, British families are turning to hosting on Airbnb as a tool to afford rising living costs.  

“In normal times, this activity, which for most hosts would be for no more than a couple days a month, offers flexibility and a source of additional income but in the current climate, it could be a lifeline. We want to work with lenders and show them the benefits of home sharing so they can update their policies and let homeowners make their homes work for them.” 

Desire to own holiday let

A separate survey of 2,000 UK adults conducted by specialist lender Together has found that 24 per cent of Brits are considering becoming a holiday let owner. This figure rises to 51 per cent among 18 to 34-year-olds.

For 48 per cent of respondents, the biggest draw was the potential profit to be made. For those aged 55 and over, supplementing their income was a biggest motivator with 65 per cent citing this as a reason for their interest.

Marc Goldberg, commercial CEO at Together, said: “Staycations have been in extreme demand – with bookings reaching all-time highs this year – and their popularity looks like it’s here for the foreseeable future. Whether families wish to stay in the UK to control costs, avoid getting caught up in potential airport travel issues, or just want to experience the UK’s beautiful countryside, there are lots of new holiday letting opportunities cropping up as more people recognise the income benefits of becoming a full or part-time host.

“While the rewards are plenty, there are some considerations for anyone weighing this up. Mortgage applications for holiday let properties are not always available from mainstream lenders, so it’s worth potential holiday let owners talking to specialist lenders, who could help to turn their ambitions of becoming a host into a reality.”

Changes apply to all of its five-year fixes in its core, specialist, expat and holiday let ranges, while its switch and fix deals have been reduced by 0.2 per cent. 

The product at 65 per cent loan to value (LTV) for standard buy-to-let properties has a rate of 6.09 per cent and at 75 per cent LTV, this is priced at 6.19 per cent. 

For specialist properties, the rate is 6.29 per cent at 65 per cent LTV and 6.39 per cent at 75 per cent LTV. 

Rates on standard expat products start at 6.34 per cent at 65 per cent LTV and 6.44 per cent at 75 per cent LTV. The specialist equivalents have rates of 6.54 per cent and 6.64 per cent respectively. 

Across its holiday let offering, the rate at 65 per cent LTV is 6.54 per cent and at 75 per cent LTV, the rate is 6.64 per cent. 

All products have a four per cent arrangement fee but lower fees are available at a higher rate. 

Keystone’s switch and fix product which allows landlords on a variable rate to move onto a fixed rate at no cost is now priced at 5.84 per cent. 

Elise Coole, managing director of Keystone Property Finance, said: “One of the things we pride ourselves on at Keystone is our ability to react quickly to market developments to ensure our range remains competitive. 

“Over the past few weeks, the market has stabilised and swap rates have rolled back, so we have taken the opportunity to pass on those lower funding costs to brokers and their clients.” 

She said the lender would continue to monitor markets and quickly make further rate cuts if conditions allow. 

Coole added: “In the meantime, we are confident we have a competitive and varied range of products that will suit the needs of most landlords.” 

CHL Mortgages  

Buy-to-let lender CHL Mortgages has reduced pricing on two and five-year fixes by up to 0.5 per cent. 

The five-year fixed deal for individuals and limited companies/LLP at 70 per cent LTV has been cut by 0.45 per cent to 6.19 per cent.  

The products for houses in multiple occupation (HMO) and multi-unit freehold blocks (MUFBs) have been cut by 0.5 per cent to 6.24 per cent for smaller properties and 6.29 per cent for larger residences. These are also available at 70 per cent LTV. 

For short-term lets, the mortgage has been reduced by 0.5 per cent and is now 6.24 per cent. Refurbishment products have been cut by up to 0.4 per cent. 

All products have a three per cent fee and early repayment charges which decline incrementally. 

Ross Turrell, commercial director at CHL Mortgages, said: “As the money markets have stabilised, we have taken the opportunity to reduce our rates.  

“The reduction in the five-year fixed rate products which are stressed at pay rate should help our intermediary partners help generate a higher maximum advance for their landlord clients.” 

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.