Landlords could switch up to 500,000 buy to let homes to short stay lets to combat rising costs forced on them by legal and tax changes.
Already, they have stopped renting out 50,000 homes as long-term lets in favour of bigger profits generated by short holiday and business lets, says letting agent trade body the Association of Residential Letting Agents (ARLA).
And if all landlords quizzed for the ARLA study commit to their plans to change the use of their private rented homes, this could mean the loss of 470,000 properties from the market.
The report also cites the swelling number of short stay homes listed on web sites like AirBnB.
AirBnB listings have soared 400% in London, from 18,000 in 2015 to 77,000 in 2019, while the site offers more than 223,000 homes for short lets across the UK.
“A key concern with the increase in short-term lets is the impact it’s having on the private rented sector and the tenants who will suffer due to a fall in the number of properties available for long-term rent. Ultimately, if supply in the private rented sector continues to fall, a rise in rent costs will be inevitable,” says ARLA CEO David Cox.
“The growth in short-term lets is particularly concerning for the traditional private rented sector. As landlords are continuously faced with increased levels of legislation, it’s no surprise they are considering short-term lets as a chance to escape this.
“Unless the sector is made more attractive, landlords will continue to exit the market resulting in less available properties and increased rent costs.”
Landlords blame changes in the law banning tenant fees, driving up property standards and a tax overhaul for increasing costs that make buy to let less profitable as reasons for driving them away from long-term lets.
Yet another new law on the way for landlords
Meanwhile, another law change is on the way for buy to lets and houses in multiple occupation (HMOs).
From July 1, landlords must carry out an electrical safety check on all new tenancies, and from April 1, 2021, the new rule will apply to existing tenancies as well. The check must then be carried out every five years.
Currently, the check is typically once every 10 years.
Safety reports must be handed to tenants within 28 days of moving in and any remedial work must be completed in the same period – otherwise councils can do the work and bill the landlord.
Councils also have the power to fine landlords failing to comply with the new regulations up to £30,000.