The government & local councils are trying to boost the long-term residential housing deficit by putting the squeeze on private short-term rentals and holiday homes.
Generation Rent is calling for government action to get properties back into the residential market by providing powers for councils to licence and cap holiday lets, as well as abolishing mortgage tax relief. By capping the number of holiday lets permitted in the region, more houses will become available for letting.
While short-term rentals are an increasing issue, second-home owners are also causing a dip in the number of residential properties available. To tackle this, in May this year, the government announced a new bill that will allow councils to apply a discretionary council tax surcharge of up to 100% on second houses that are “periodically occupied”.
The Welsh government is following suit, but coming down much harder on second-home owners by enabling councils to impose a 300% council tax premium on second homes and long-term unoccupied properties.
Stephen Clark from Finbri, a UK bridge loan company, says, “The higher tax rates imposed on vacant second homes, may encourage some owners to sell or potentially convert their property into a short or long term rental, however this in isolation won’t solve the current housing supply-demand imbalance. With the decreasing number of family homes available for rent in recent years, converting a second home into a long-term residential let would ease the increasing number of individuals and families, struggling to find a home.”
Long-term residential rentals decreasing as the number of holiday rentals rises
Many regions across the UK have seen a spike in properties running as short-term holiday homes, which has raised concerns over the impact this may have on the availability of long-term rental properties.
Between 2017-18, around 2.8 million households across England casually rented out part or all of their homes on holiday rental sites such as Airbnb, while the amount of properties available to rent has halved since 2019.
With popular holiday rental platforms such as Airbnb enabling property owners to easily rent out their vacant property for high-value short lets, the UK holiday rental market has grown to a staggering £1.4 trillion. Currently, on Airbnb, a small two-bedroom house in St Ives was listed for more than £3,000 for half-term, while a four-bedroom house on Vrbo was listed for £668 per night.
It’s understandable why property owners are considering holiday lets as a method to boost their profits. Serious consideration should take place however, to ensure that a boom in holiday lets don’t simply create a scarcity of long-term property lets, therefore hiking rental prices even further.
Which regions are seeing a large increase in the number of holiday lets?
Rural “staycation” hotspots such as Cornwall, Devon, South Lakeland, and Northumberland, have seen huge increases in the number of holiday lets that have become available since the pandemic of 2020. According to research carried out by the CPRE, the data they collected from Airbnb and other holiday home websites found that in September 2021, a staggering 148,000 properties had been available for short-term rent, while in 2020, 176,058 rural families were waiting for accommodation, up from 167,160 in 2019.
Based on a study of Zoopla data, the housing campaign organisation Generation Rent discovered that the number of second homes and commercial holiday lets in Wales climbed from 31,779 to 33,474 over the same period, with the average weekly rent jumping from £155 to £181.
According to Cornwall Council, which has roughly 22,000 residents on its social and affordable housing waiting list, as many as one in four properties in parishes near Padstow on the north coast are second homes.
While popular rural areas have been impacted greater than any other place in England, London has also seen a 571% increase in the number of Airbnb listings in the last 5 years. With such staggering growth, it’s easy to see how the impact can affect the rental market.