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Restrictions on international travel have fueled the rise in staycation holidays, resulting in several landlords seizing the opportunity for higher rents by moving their private rented sector stock into the more in-demand short term holiday rental sector, which also happens to be less regulated.
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The Rise of Staycations: Will there be anywhere left to rent? As providers of property inventory in East London, it is difficult to analyse today’s social and economic changes without bringing the global pandemic into the discussion. In the housing rental industry, the effects were a staggering decline in the number of private rental sector properties available for local people. The seemingly overnight rise in AirBNB style short term lets has paved the way to greater returns for many private and commercial landlords, but are these holiday staycation rental transactions and their profitability having a negative impact on local communities and will there be anywhere left to rent? What is a short term let (STL)? Short term lets are the types of properties that provide accommodation for tourists or visitors that are looking to stay at a location for an average of 1-4 weeks, but can go for as long as 6 months. The traditional long term lets in the private rented sector are usually for an initial fixed term of six months and are subject to an Assured Shorthold Tenancy Contract or similar. Restrictions on international travel have fueled the rise in staycation holidays, resulting in several landlords seizing the opportunity for higher rents by moving their private rented sector stock into the more in-demand short term holiday rental sector, which also happens to be less regulated.
Our inventory clerks in East London have observed that the situation is compounded by the fact that as rental properties decline in numbers, there is less choice and therefore many sitting tenants are looking to stay put and looking for longer contracts. Can all this be blamed on the pandemic? The growth in the AirBnB market over the last decade, paired with the removal of tax relief, higher stamp duty and the increased legislation for PRS properties, including the proposed removal of Section 21 has encouraged many landlords to evolve their strategy and consider short term holiday lets as an alternative to the traditional longer-term rental model. When they were surveyed, 1 in 10 landlords said they were considering such a move which could remove up to half a million properties from the PRS if they pursued the decision. Based on figures gathered by our inventory and check in service in London, rental costs for longer-term tenants have been rising faster in areas where short term rentals are most common. This trend is likely to continue, especially in large cities as property investors look to buy homes specifically for short-term rental. Without a doubt, in hotspot areas, the profitability of rental return on short term lets is substantially greater than traditional PRS rentals. Property purchases by outside investors in top holiday spots have increased dramatically in part due to the short- term rental phenomenon. Is there any good news on the horizon for longer term tenants? Right now, it looks as though international travel is back on the cards, so that could be an indication that the demand for STLs could taper off. Recent studies have seen that rental growth is in positive territories, especially for areas like Manchester, Leeds and Edinburgh with just 15 days referenced as an average time to secure a rental, the fastest pace since 2016. There might be good news on the horizon as commercial jobs and city life is returning, coupled with the fast growth of technology and property management software that is making the job of being a landlord easier, we should see an easing of pressure on tenants as more and more properties become available again for longer- term lets on the PRS. Content Source: Property Inventory In East London
