Recent studies by housing data specialist Propalt reveal a substantial shift from long-term rentals to short-term, Airbnb-style lettings. Analysis of over 2,800 short-term lets in London over the past three years showed that more than a fifth of these properties were previously available for long-term tenancy. Propalt predicts that as tenancies expire, these properties are unlikely to return to the long-term market, potentially leading to hundreds of thousands of properties transitioning to short-term lets.
Reasons Behind the Trend
Landlords are increasingly attracted to the short-term rental market due to higher potential returns and lower fees compared to traditional long-term rentals. This trend is exacerbated by the rising popularity of online platforms like Airbnb, which offer easy access to a global pool of potential tenants.
Quantifying the Growth
Benham & Reeves, another estate agent, conducted a separate analysis, revealing a steady increase in the number of short-term lets available in London, particularly through Airbnb. Their data shows a consistent quarter-on-quarter growth in the number of short-term lets from the last quarter of 2022 to the third quarter of 2023, highlighting the rapid expansion of this market segment.
Implications and Responses
Impact on Long-Term Rental Market
The growing preference for short-term lets is expected to significantly reduce the availability of long-term rental properties. This shift could exacerbate housing shortages and drive up rental prices in the capital.
Monitoring and Anticipating Changes
Experts like Yujie Gong, head of data at Propalt, emphasize the need to monitor this trend closely. They note a pattern where long-term rentals are quickly converted to short-term listings, a trend that may continue unless long-term lettings become comparably lucrative.
The Industry’s Adaptation
Property specialists, including JLL’s Marcus Dixon, observed that many landlords transitioned to short-term lets during the pandemic due to increased demand for staycations and higher mortgage costs. However, there is some optimism that this might be a temporary shift, as landlords might return to long-term rentals due to the additional obligations associated with short-term lets.
Government and Industry Initiatives
In response to these trends, short-term letting platforms like Airbnb have agreed to share data with the Office for National Statistics. This initiative aims to provide better insights into the industry, helping authorities make informed policy decisions. It is hoped that this data will balance the economic benefits of tourism with the needs of local communities.
Addressing Housing Concerns
Airbnb has pointed out that the typical London listing on its portal is rented for only 43 nights a year, and many hosts use this income to cope with the rising cost of living. The company asserts its commitment to addressing housing concerns and has called for national regulations on short-term lets.
The Broader Picture: Housing Shortage and Rising Rents
The shift towards short-term lets comes amid a growing housing shortage in London. Rental prices have risen significantly, further stressing the importance of understanding and managing the dynamics of the rental market effectively.
Conclusion: A Dynamic and Evolving Market
The London rental market is at a pivotal juncture, with the rise of short-term lettings reshaping the landscape. While this offers opportunities for landlords and contributes to the tourism economy, it also presents challenges in terms of housing availability and affordability. Ongoing monitoring, data-driven policy decisions, and a balanced approach are essential to navigate these changes effectively.