There’s been a huge jump in the number of properties being listed for short-term rental on “sharing economy” portals such as Airbnb, leading the Residential Landlords Association to ask “Is Airbnb becoming the new buy-to-let?”
The number of Airbnb listings in London alone has grown by 60% in just over 12 months, reports that RLA’s research team, from 33,715 to 53,904 listings. And there was an even more significant 75% surge in the number of “multi-listings” – where individuals advertising more than one property on the website – between February 2016 and March 2017, indicating a rising “professionalism” amongst Airbnb hosts.
Number of London Listings on Airbnb between February 2016 and March 2017
Change in the number of Airbnb multi-listings between February 2016 and March 2017
Whatsmore, the number of whole properties and rooms made available for more than 90 nights a year via Airbnb increased by 23% between February 2016 and March 2017 – despite planning permission being required in such circumstances, and Airbnb becoming quite efficient at policing this.
“Private room” listings represent the bulk of the growth, accounting for 67% of the increase in London.
Change in the number of Airbnb listings between February 2016 and March 2017
7% of landlords quizzed by the RLA said that they had already started to offer their properties – which they previously let long-term – as holiday or short-term rentals through Airbnb and its ilk. Extrapolating with HMRC data for unincorporated landlords, the Association’s Tom Simcock argues that these represent a loss to the longer-term Private Rented Sector; “this would mean a minimum of 134,400 private rented homes moving from the traditional private rental market to holiday or short let accommodation,” he says.
Going back to Airbnb’s numbers (using data from InsideAirbnb): the overall number of entire home/apartment in London listed on the website has grown by 54% in over 12 months, with an 8% increase in the number of these listings that are available for over 90 nights per year. This, according to RLA workings, “is now a potential 12,213 homes unavailable for families to rent for the long term”.
Change in the number of Airbnb listings with an availability over 90 nights between February 2016 and March 2017
So what’s driving the trend? Over a third (36%) of surveyed landlords mentioned changes to mortgage tax relief as a significant push to the short-term arena (landlords are now taxed on income, rather than just profit, with tax relief only available at the basic rate).
Less official activities are also boosting Airbnb’s numbers: 7% of landlords reported that they had found their tenant had advertised a property or room without their permission.
The RLA is using its research to lobby the government to “end the perverse incentive landlords have to move to holiday lets by scrapping the mortgage interest relief changes”, calling the current regime “incomprehensible” and quoting one landlord to illustrate the cause: “I didn’t want to do this, but the tax changes have forced me down this route. Selling is not an option due to CGT, 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.”
RLA Policy Director, David Smith: “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.”
Read the full report from the RLA’s Private renting Evidence, Analysis and Research Lab here