The rising influence of short-lets – how could it affect letting agents?

It sometimes feels like there’s not a day that goes by without a news story concerning the growing short-lets market.

The phenomenon, led from the front by global brand Airbnb, seems to have reached fever pitch in recent years, with criticism of how short-term lets are regulated, talk of them fuelling the housing crisis by tying up vital housing stock and a number of articles about homes being trashed, damaged or used for wild parties.

Despite the criticisms, many see short-lets as a modern, positive and forward-thinking idea – and the success of Airbnb certainly backs this up. It’s also proving somewhat of a boon for landlords or ‘hosts’, with many realising they can often make more money from listing their home on Airbnb rather than letting a property in the more traditional way (in 2015, for example, a typical Airbnb landlord in London could earn £3,500 a year from letting a room or property).

Short-let websites have flourished since 2008, when Airbnb was founded in San Francisco as part of the Silicon Valley start-up boom that coincided with the global financial crisis. It wasn’t long before Airbnb was available internationally, with London taking to the idea with particular gusto. As of now, more than 50,000 UK-based hosts list on Airbnb, with properties/rooms on offer throughout the country.

While Airbnb massively dominates the market, it does have various imitators, particularly in cities with a high number of tenants, tourists and major businesses. Short-lets might be attractive to a group of friends on a city break, a businessman or woman who needs to be based in a certain city for a few days or someone who has recently moved to a new city and hasn’t yet sorted out anywhere to stay.

What’s more, those moving house, having major works carried out on their property or transitioning from one tenancy to another may find themselves temporary homeless and after a short-term solution – short-term lets are cheaper, more homely and offer more comforts and personal freedoms than a hotel, so you can see why they might prove more popular.

However, strong pressure from politicians and agency bodies forced Airbnb to announce last December that it was blocking London landlords from letting their properties out for more than 90 days a year without planning permission, a move which was warmly praised by the property industry and City Hall.
Mayor Sadiq Khan has since called for other short-let websites to follow suit, writing to six of Airbnb’s competitors - Veeve, One Fine Stay, Wimdu, Booking.com, HomeAway and Airsorted – to encourage them to take similar action and implement 90-day limits on rentals in London.

The argument goes that being able to let properties on a short-term basis for the whole year is to the detriment of the London rental market, causing a loss of much-needed stock. It’s a tricky balancing act for major cities, though – they know full well the benefits that the likes of Airbnb and other short-term let platforms bring, in terms of tourism and added flexibility, but they don’t want their rental stock eaten into by the phenomenon.

Research suggests that the 90 day limit imposed by Airbnb in the capital could cost the firm more than £325m a year, but others – including a third of London councils, according to a recent BBC report – believe the 90 day limit won’t work and, due to a lack of resources and regulation, can be easily flouted.
Maybe, then, a proper drive towards regulating the sector – making sure it’s fair for all parties concerned - is what is needed. Maybe the short-term lets market could be tied up in some way with traditional letting agencies, who could use their years of experience and knowledge of the sector to manage Airbnb and other short-let properties in an effective way. With worries over diminished rental stock and short-let homes being used for purposes other than advertised, would it not be a good idea for agents to offer an Airbnb management service of some kind?

Clearly, the demand is there for short-lets, but there is a difference between living in a home for a week and living in a home for six months or longer. In future, the lines between short-lets and longer-term ones will have to be blurred, with greater regulation and a stronger emphasis on management and best practice to ensure a more professional approach, particularly if Airbnb continues to encroach on the market covered by traditional letting agents. As short-term rentals continue to grow, the calls for more scrutiny and stricter rules will become louder.

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Montana H

Business Development Director