How the government is pushing landlords towards short-lets

XChange has a partnership with Hostmaker, a company providing end-to-end short-let management. 
In recent years, the government has been placing severe measures on buy-to-let investors. This is to discourage them from considering residential property as an investment. The hope was to reduce the pressure on house prices and free stock for owner-occupiers. The most prominent of these measures is the phased reductions in tax relief on buy-to-let mortgages introduced in 2017.
Due to this, half a million rented homes could be taken away from tenants and moved towards the holiday lettings sector states the Telegraph*.
This is because, from April, landlords will no longer be able to offset their mortgage costs from their tax bills. Those who have holiday rentals, will. Especially if these properties are in cities where there is a high demand for short-lets. These properties offer higher returns than the traditional long-term rental market. They also give the added flexibility for the landlords.
As a result, 2.7% of landlords have moved their properties out of the private rental property sector (according to a report by letting agent body ARLA Propertymark and Capital Economic). Though a small percentage, this equates to 46,000 homes no longer being available to the long term rental market.
As the supply levels for private rental properties falls, the rentals continue to increase. According to Rightmove, rents increased by 2.4% across the UK. The more rental stock removed from the market the more this is expected to increase.
Though the holiday short-let industry is profitable for many people, it is not suitable for every landlord. There is a lot of work involved in setting up and running a short-let property.

Potential revenue opportunity for your agency

To meet this demand, there are many new businesses that are targeting landlords that need help managing their short-let properties. One of which is Hostmaker, a business that gets your property ready to be listed as a short-let as well as helping find and manage leads for said property. In the past 4 years, the number of Airbnb UK listings has gone up four times according to the ARLA report. This is an increase from 18,000 units in 2015 to 77,000 units in 2019.
The general consensus is that this trend will continue to rise as the market is quite lucrative. What’s interesting to note is how short-lets are concentrated in places where prices are already more inflated. Thus putting more pressure on affordability.
graph of ST & LT supply levels in the UK
For example:
  • In Havering (East London) average house prices are £361,970 and only 0.2% of property stock is listed on Airbnb.
  • Compared to Westminster, where average house prices are £946,430, that share is 6.7%.
As short-lets become popular it’s important to keep an eye out on the growth and find ways to support your landlords if they decide to make the switch. At XChange, we understand that though the appeal for short-lets is high, the work involved is even greater. This is why we have partnered with Hostmaker to make it easier for independent agencies to meet the short-let demand. By partnering with us, we provide the tools and support needed to grow your business.

So where do you go from here

Earlier in 2019, Tfl banned short-let advertising in the tube, claiming that those ads were offensive and were sending the wrong message. This makes the market lucrative but not without hurdles to overcome. This is where we can come in. If you’re finding it difficult to service your existing short-let landlords, we believe that we can help. 
At XChange, our goal is to empower Independent agents in growing their businesses. By providing them with the support and tools that they need to further make an impact in their local market.
Looking for some more guidance? Get in touch and one of our advisors will help you get started.

*All statistics obtained in this article are from the Telegraph’s article which can be seen here:

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