Homestay networks and renting short-term lodgings are on the up – just look at the exponential rise of peer-to-peer sharing platform Airbnb.
The company is valued at over £17bn, and we are seeing more listings appear every week. There are currently over 49,300 listings in London alone, according to Inside Airbnb, and while Airbnb describes its services as a way for people to “monetize their extra space”, the site is increasingly attracting full flats than spare rooms, the Residential Landlords Association (RLA) found in a recent study.
The same report showed that from February to June last year, there was a 34% increase in the number of homes being listed by hosts who have other properties on the site. The figure suggests that these hosts are not simply people looking to rent out the occasional spare room, but rather professional landlords moving to Airbnb to seek out short-term lets. But this could be set to change.
It has been suggested by the RLA that the government is about to review Rent A Room tax relief in response to the volume of short term lets. The scheme currently allows those letting out rooms in their homes to lodgers and via Airbnb to earn £7,500 tax free.
Following media and political pressure in the UK, Airbnb has also made a move to host responsibly. It will automatically limit entire home listings in Greater London to 90 nights per calendar year, unless the hosts confirm that they have the required permission to share their space more frequently.
Only time will tell if landlords will continue the shift away from traditional long terms lets to shorter stays, or if ever increasing regulations and legalisation will deter them. But, as it stands the benefits include:
Increased rental value
Especially in London, eager tourists are willing to pay more for a short stay. Savvy landlords are able to capitalize on this lucrative market by securing regular short-term rentals at high rates.
The latest RLA report shows that an entire property rented out on Airbnb fetches on average £139 a night, while the nightly rental value of a longer-lease London property averages only £51a night. Such figures mean that regular bouts of short-term lets can easily be more profitable than long-term rentals.
The share economy continues to grow around the world, and Airbnb has been one of the main players in the trend. We are seeing more people choosing to holiday in Airbnb properties rather than hotels, and more and more hosts choosing to rent out their homes to capitalise on the growing demand.
One of the greatest benefits brought by the new digital platform is the flexibility it allows; landlords no longer have to commit to long-term rental contracts, instead, they can profit from their properties as and when it is convenient for them.
With big questions surrounding Airbnb, its relationship with the rental market and how it’s affecting the UK housing crisis, one thing is sure – landlords need to take notice of the increasing changes to legalisation and regulation to ensure that they are acting responsibly on everything from their insurance policy, their tax and neighbours.
Dave Hadden is the head of letting at Endsleigh.