An increasing number of rental properties in London are being used as short-term holiday lets through websites such as Airbnb, and are no longer available for long-term tenants, according to analysis by the Residential Landlords Association (RLA).
The RLA has found that, across the capital, there was a 75% increase in the number of multi-listings on Airbnb between February 2016 and March 2017. Multi-listings are classed as individuals advertising more than one property on Airbnb.
The research also shows that the number of whole properties and rooms advertised on Airbnb in London for more than 90 nights per year has risen by 23% between February 2016 and March 2017. This is despite planning permission being required in such circumstances, and Airbnb launching a crackdown to better enforce this rule at the start of the year.
A UK-wide survey by the RLA of almost 1,500 landlords has found that 7% now offer properties as holiday lets through Airbnb or a similar platform. These are properties that they would have previously let on a long-term basis in the private rental sector. If this statistic was reflected across the whole market, it would mean that a minimum of 134,400 private rental homes have moved from the traditional sector to holiday lets.
Of those that have moved over to holiday lets or short-term rentals, 36% said that it was due to the Government’s changes to mortgage interest tax relief. These changes include landlords being taxed on their income rather than their profit, and tax relief only being available at the basic rate of Income Tax.
One landlord who has made the move to holiday lets commented: “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 [Capital Gains 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 end the incentive landlords have to move onto holiday lets, by scrapping the mortgage interest tax relief changes.
David Smith, the Policy Director of the RLA, says: “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.”
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