MPs need to think bigger when it comes to short-term rentals

Amid the worsening housing crisis, the government has turned its attention to short-term lets as a solution to the vast difference between supply and demand. However, as the short-term rental industry experiences a similar supply and demand challenge, this focus risks disrupting a sector that is now essential to British tourism and obscures the real problem with housing in many UK communities. Though there are some areas of the UK where short-term rentals are squeezing the housing supply, the number of properties freed up by holiday rentals would still not be enough to solve the problem. Making this sector of the market the main target also doesn’t do any favours to the actual challenges faced by the housing industry right now. In Devon, several MPs have been speaking out on how short-term lets affect their constituencies. Anthony Magnall, MP for Totnes, recently claimed that at one time there were 3,454 properties on AirBnB compared with 34 available long-term rental properties in his area. Magnall also argued that there were over 13,000 second homes in Devon as initiatives like the stamp duty holiday have made second home acquisition more accessible. Though Magnall attempted to draw attention to holiday lets, these figures suggest that AirBnB properties make up a quarter of second home properties. While some claim that empty second homes are making ghost towns of seaside resorts, holiday rentals are regularly used and bring tourism, which many seaside towns rely on. Therefore, to properly understand how holiday and second homes impact the market, these two property uses need to be considered separately. While restricting holiday properties in these areas may create more available long-term homes, it’s not just supply that is causing pain for first-time buyers and renters. Devon MPs also argue that their local constituents are being priced out of their hometowns and adding restrictions to holiday lets doesn’t guarantee any change in the price of long-term rental accommodation. In contrast to some seaside locations, London’s short-term rental market has never recovered from the pandemic. Data obtained by Your AirHost from AirDNA shows that short-term lets are down 27% across the capital, with only six neighbourhoods showing an increase in the number of listings on sites like AirBnB. Should more red tape be introduced for holiday let owners, this could result in even fewer available places to stay in London. Though demand is still far outstripping supply in the long-term market, the same can be said for short-term lets. With a drop in availability, the average cost per night for short-term stays has risen by 67% in the same period. As with other areas of the country, it will take more than releasing short-term rentals back into the long-term market to satisfy supply – particularly in London, where available long-term homes are down 46% compared to 2019. This highlights the challenge of targeting holiday homes as they have become a central part of our tourism industry and do not offer the complete solution to the housing crisis that some in the government believe they do. Cost and availability are the overarching issues that the government needs to tackle, and whether in the city or on the coast, holiday home stock does not hold the answer. Without measurements that take into account both of these issues, the London rental crisis will continue to cause chaos for long-term residents. Volatility in the housing market in the form of rising interest rates means two things for the future of the housing crisis: rented accommodation will stay high in price as landlords deal with higher mortgages and second home owners may sell up as their repayments become too much to manage. This means that even without further regulation of holiday lets, some may still return to the market but the issue of price will not be resolved. Additionally, higher interest rates and measures like a 300% council tax on second homes will not affect those who can afford it, and therefore result in no increase in the number of rental homes available. Though some communities are having housing issues due to second homes and holiday lets, this is only the case in some places. AirDNA’s internal data also found that places like Edinburgh and Oxford are experiencing a similar issue to London where short-term supply has yet to recover from the pandemic. What the government could do to ensure they support local residents and the tourism industry is to give power to local councils to make decisions for their own areas. Local council powers could include the ability to limit second homes or holiday lets to allow for a balance that retains local residents without diminishing the value of the tourist economy. Allowing local councils to make these decisions avoids blanket regulations that affect all holiday rentals so that places like London will not experience further challenges where there is still a high demand for short-term lets and an even smaller supply. With the holiday rental market now representing a small fraction of property in the UK, positioning it as the solution to the housing crisis doesn’t think big enough and sets the government up to fail in tackling one of the biggest challenges of modern politics. While there are some steps that could be taken to find a balanced ground, any step taken will need to consider every aspect of the problem to have a chance of producing positive results.

MPs need to think bigger when it comes to short-term rentals

By Stefan Hoffelner, the owner of London AirBnB management company, Your AirHost

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