The drop-off in demand for short-term lets due to the impact of coronavirus should be seen as an opportunity to address the lack of regulation in the sector, according to inventory services provider No Letting Go.
Until recently, more landlords and letting agents have been taking advantage of short-term lets; a recent ARLA Propertymark report found that UK Airbnb listings rose by 33% in 2018.
Nick Lyons, CEO and founder of No Letting Go, said: “Up until now, the rise of short-term lets had been down to a combination of factors – increased demand for short stays and flexible accommodation, as well as tax changes affecting buy-to-let investors, forcing them to look for alternatives to the traditional market.”
Rapid growth in a sector that is largely lacking in regulation and enforcement has left many at higher risk of experiencing damage to their properties.
In London, for example, homes can be let on a short-term basis for only 90 nights per year, but Camden Council has reported that 48% of available short-let properties in the borough had exceeded this allowance.
There is also limited regulation around property upkeep, tenant vetting or contracts.
However, the UK Short Term Accommodation Association has reported that, due to the outbreak of coronavirus and subsequent lockdown, 70% of short-term rental bookings have been cancelled, rising to 90% for some businesses.
Lyons said: “It’s not surprising that the short-term lets sector has been one of the industry’s hardest hit markets.
“People are being urged to stay at home, and so a huge amount of bookings will have been cancelled by both renters and landlords.”
He added: “As the short-term lets industry faces its first major hurdle due to the current global situation, now could be a good time for the sector to consider how it could be better regulated in the future when normal service resumes.
“The regulation that is in place – such as the 90-day per year rule – needs to be properly enforced, while there needs to be serious thought given to introducing laws similar to those that traditional landlords must comply with.
“The formation of the sector’s trade body, the UK Short Term Accommodation Association, is a positive step but more needs to be done if the sector is to be brought in line with the rest of the market.
“Our advice for landlords looking to move into the short-lets market is to be careful.
“Yes, the returns can be impressive but without putting in place necessary measures, you could be putting your long-term investment at risk.
“Meanwhile, for agents looking to manage more short-lets and take advantage of a booming market, it’s vital their management packages offer some protection to landlords.
“This could include a professionally compiled inventory, thorough vetting process, taking deposits and providing access to comprehensive insurance or rent guarantee policies.
“We expect the short-term lets market to continue to grow once the coronavirus pandemic abates.
“However, landlords’ properties could be at risk if there is no commitment to further regulation in the sector, so it would be good to see a concerted effort to see more protective measures introduced.”