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Short-term benefits

Marcus Dussard

June 30, 2021

Marcus Dussard is sales director at Hampshire Trust Bank

Landlords who remain committed to the BTL sector – and this number continues to dwarf some of the speculative figures seen in recent times – continue to re-evaluate the performance of properties within their portfolio and diversify where possible. Be this in the form of HMOs, MUB’s or short-term lets.

In light of our ongoing campaign aimed at putting the power back into the hands of intermediaries by freeing clients from assured shorthold tenancies (ASTs), let’s take a more in-depth look into one of these areas – short-term lets.

Lingering COVID-related restrictions may not have exactly fuelled the fire of this lending type in 2020 but a recent study by the UK Short Term Accommodation Association highlighted renewed confidence that this sector will swiftly recover to the levels of business experienced in 2019.

The data found there’s an 89 per cent average confidence rating around the outlook for short-term lets for the remainder of 2021, up from 69% in February. It also reported an average confidence rating of 83% for 2022.

Short-term lets is an area which has captured the attention of a growing number of landlords in recent years thanks, in no small part, to the Airbnb phenomenon and this data represents some positive sentiment moving forward.

While the term staycation will continue to dominate column inches, there are many other scenarios for landlords and intermediaries to take into account. For example, contractors working at nearby sites for extended periods, or families needing a short-term base for a couple of months through a property licence.

These are just two instances that we, as a lender, can consider when meeting ICR’s and it’s these types of common sense criteria tweaks that are leading to more and more landlords appreciating the flexibility and yield of short-term lets.

And when you add existing homeowners who are taking advantage of rising house prices by selling without immediately looking to purchase, plus buyers who are waiting for new build properties to be finished into the mix, then it’s fair to say that demand for this property type has become stronger and more diverse.

For landlords, it’s all about providing tailored solutions which can power up affordability levels and improve returns where possible. When located in the right place at an optimal time of year, a short-term let can earn four or five times the amount a standard BTL property on an AST can make in a month.

Even typing these words make me realise just how attractive such an option can be for property professionals but it’s also prudent to point out the performance of such properties can vary wildly depending on the above formula of location and timing.

In addition, these are also the types of properties which may need a significant amount of resource when it comes to the 3 M’s – marketing, management and maintenance. Factors which landlords and investors can sometimes, at best, underestimate or, at worst, ignore completely.

The quest to increase yields and reduce costs is a continuous battle for all landlords, as such, the value of the advice process throughout this journey continues to rise.

A key factor in delivering this value is recognising the importance attached to the relationship between advisers and specialist lenders. As additional market complexity emerges, product offerings evolve and enhancements to criteria/policy materialise, these relationships are vital in ensuring that landlord clients have access to the kind of bespoke solutions which can help them navigate the modern BTL market. And this is something that we, as a lender, will continue working hard to strengthen.


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