Landlords increasingly considering move into holiday lets

Robyn Ashman

August 25, 2017

Landlords are considering moving into short-term holiday letting and getting out of the private rented sector due to tax changes, according to the Residential Landlords Association.

RLA figures show that 7% have already made the switch and now offer properties as a holiday or short-term let through Airbnb and other similar platforms.

This comes as data also shows that there was a 75% increase in the number of such listings in London alone between February 2016 and March 2017. The number of whole properties and rooms advertised on Airbnb in London available for more than 90 nights a year has increased by 23% over the same period.

The increase in listings has happened despite planning permission being required in such circumstances and Airbnb launching a crackdown to better enforce this rule at the start of the year.

If the rate of movement in London was replicated across the country it 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% 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 said: “I didn’t want to do this, but the tax changes have forced me down this route. Selling is not an option due to 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 perverse incentive landlords have to move to holiday lets by scrapping the mortgage interest relief changes.

RLA policy director David Smith said: “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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