The net is closing on short term lets, are you in or out?
The RLA published an article this week regarding short term lets "There has been a massive growth in short term lettings and landlords are moving properties from long-term to short-term lets due to Government tax changes... Disincentivising residential stock... and promoting short term holiday lets does not increase the supply of homes." (Dr Tom Simcock).
Hardly rocket science but what does that mean for we landlords here in Portsmouth?
A few interesting facts:
3 years ago there were barely 50 Airbnb properties in Portsmouth, these are today's figures:
529 properties listed on Airbnb, of which 44% are whole properties (not just rooms), growing at 1% quarterly. Clustered largely in Southsea, excluding traditional holiday accommodation.
39% of this total is available full time, so probably hosted professionally. That's over 200 properties out of the rental market in just the last 3 years.
Average nightly rate (entire home) £99 (private room) £27.
Average occupancy 56% via Airbnb (many are listed on other sites so the real figure is going to be higher).
Portsmouth market rated B+, 79/100.
Average revenue (entire home) £1217 monthly. (bearing in mind other marketing channels adding revenue and costs of approx. 50% for a "hands-free" investment).
It is only a matter of time before regulation envelops short lets as it has HMOs. Options may include registering, licensing, zoning or a new planning class.
What is more concerning is the number of these properties that are being run unlawfully, some will be in breach of their mortgage (thus invalidating their insurance), flats are likely to be in breach of their lease and very few will be listed for business rates. The only safety requirements for a holiday let (of a whole property) are a self-certified Fire Risk Assessment and a Gas Safety Certificate that is checked by nobody. This not only gives the naive operator a competitive edge when it comes to pricing and profit but could well jeopardise the safety of guests.
I have also noticed a number of micro- hotels renting by the room in HMOs in residential streets as well as student halls of residence advertising for Summer guests, causing greater pressure on parking (most guests bring a car, unlike students), disruption to the neighbourhood and waste. Both these uses breach planning class. Although a C3 (residential) can be used as a whole house holiday let a C4 cannot and neither can a C% student hall, neither can be used by the room as this is class C1(hotel) and represents a material change of use. All the arguments that have been used against HMOs in residential streets can be amplified when there are guests coming and going every few days, and that's before even going there with the Airbnb party places, I have headed off a few of those guests!
Short term accommodation gives communities a great shared resource, many of my bookings are from locals who are delighted to put up their relatives near home in a homely holiday flat, as people are increasingly unable to afford a place with a "spare" room. The most successful apartments for me are not the lovely seafront ones but the B and C-list locations, doubling up to provide contractor accommodation during the week and leisure guests with local connections at the weekends.
As the number of short lets grows the inevitability of regulation and an increasing number of barriers to entry to the sector will arise, if you are watching and waiting now is the time to be in, before you are shut out. But do so legally or not at all please.
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