Landlords Tuning to Holiday Lets following Tax Hikes by Government

Landlords Tuning to Holiday Lets following Tax Hikes by Government

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An increasing number of rental properties in London are being used for short term holiday lets using websites such as Airbnb and are no longer available for long term renting.

New research by the Residential Landlords Association’s (RLA) reseach lab, PEARL,  has found across the capital that there has been a 75 per cent 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.

Further evidence of the change in letting comes from the analysis showing that the number of whole properties and rooms advertised on Airbnb in London available for more than 90 nights a year has increased 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 seven per cent reported that they had now started to offer properties as holiday/short term lets through Airbnb or a similar platform. These are properties that they would have previously been let longer term in the private rented sector. If this was reflected across the whole sector, this would mean a minimum of 134,400 private rented homes moving from the traditional private rental market to holiday or short let accommodation.

Of those who have moved over to short-term letting, 36 per cent reported this was because of the changes to mortgage interest relief. These include landlords being taxed on their income instead of their profit and tax relief only being available at the basic rate. 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, 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 perverse incentive landlords have to move to holiday lets by scrapping the mortgage interest relief changes.

RLA Policy Director, David Smith, commented:

“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.”

Read the RLA’s Senior Researcher, Tom Simcock’s blog post on the findings here.

Read the full report from the RLA’s Private renting Evidence, Analysis and Research Lab (PEARL) here.

Don’t forget to follow RLA PEARL on twitter here: @RLA_PEARL


Dr Tom Simcock

Until February 2019 Tom was the Senior Researcher for the RLA. His expertise lies in researching change in society, public policy and quantitative and qualitative research methodologies. Tom’s research on housing has received national media coverage, featuring on the front page of The Times, has influenced government policy making, and has been cited in debates in the House of Commons, House of Lords and by the London Mayor. Tom now works for Edge Hill University.