Research by the National Landlords Association has revealed that, despite the popularity of companies such as Airbnb and HomeAway, as few as 3% of landlords are currently engaged in the informal short-term lettings market.
Of those landlords who do not offer short-term lets, an overwhelming majority have not considered entering it, with only 24% of respondents reporting to have considered it at some point.
Short-term lets, which range in length from one night up to around six months, have increased in popularity in recent years and landlords can generate significant income from letting their properties in this way.
However, this can breach a landlord’s mortgage terms and invalidate their existing insurance policy, so it’s vital for them to be aware of the problems it can present.
Richard Lambert, CEO of the NLA, says: “We had expected to see a slight increase in the number of landlords letting furnished holiday properties after changes to taxation were introduced in April last year. While this has not been the case for most of the UK, it is worth noting that 20 percent of landlords in Scotland do offer short-term lets.
Holiday lets are treated very differently to other property portfolios in tax and regulatory terms, the decision to switch may be a ‘no-brainer’ for landlords in areas where there is strong demand from temporary visitors, particularly as there is are no real downside and nothing holding them back from doing so.
However, a shift of properties in a concentrated area to shorter-term letting can have a significant effect on the local rental market, reducing available properties and pushing up rents. There will always be unintended consequences when policymakers don’t make the effort to understand landlords’ motivations and behaviour.”