Buy to let property investors are increasingly opting to list their properties as short term lets on holiday home websites such as Airbnb, reducing the stock of homes in the long term private rented sector.
The Residential Landlords Association (RLA) conducted new analysis of nearly 1,500 landlords, and discovered that over 130,0000 homes have been taken out of the long term private rental sector. It was found that the largest jump in the number of landlords advertising property on Airbnb was recorded in the capital, where there was a 75 per cent rise in the volume of multi-listings on Airbnb between the months of February 2016 and March 2017.
It was found that number of whole properties and rooms advertised on Airbnb in London available for more than 90 nights a year increased by 23 per cent between February 2016 and March 2017. This comes in spite of the fact that planning permission is required in order to do this.
7 per cent of those surveyed stated that they had now begun to offer properties as short term lets or holiday homes via Airbnb or other similar platforms. It is likely that these homes would have previously been let as long term buy to let offerings. It can thus be estimated that should this trend be extended across the whole sector, a minimum of 134,400 private rental properties would be taken from the traditional private rental market to short term lets.
36 per cent of those who have made the switch to short term letting claimed that this was due to the changes to mortgage interest tax relief.
One landlord who has made such a decision explained: ‘I didn’t want to do this, but the tax changes have forced me down this route. Selling is not an option due to capital gain tax, and this iniquitous tax which is effectively retrospective is unjust in that my buy to lets are a business, just like any other. There will be less properties available to rent as a result of this tax.’
The RLA is calling on the government to scrap the changes to mortgage interest tax relief in order to stem the flow of landlords leaving the sector.
RLA policy director, David Smith, said: ‘With London and the country as a whole in desperate need of new homes to rent in the long term, it is crazy that recent tax changes encourage landlords to move to the short term holiday let market. What we need is a tax system that encourages investment in homes to rent for the long term by good landlords. By skewing the market government policy will serve only to hit the hardest those young people and families who most need a growing private rented sector to meet their needs.’