Enthusiasm for the sharing economy seems like a distant memory…before Covid, many of us were busy mucking in and sharing/renting our homes, vehicles and household equipment. Some of us started using Airbnb professionally, where is it going next?
A Portsmouth story...
When I started in the short-let market, in 2016, there were 65 airbnbs in Portsmouth. There are now, seasonally, 500-800 units available. The market has expanded for sure as people seek out self-catering places for privacy and to keep their germs to themselves. The market has been impacted the other way as well. Pressure on landlords from legislation and tax changes has made them re-consider the use of their properties and many have dipped a toe, foot or leg into the short-let market. The facebook groups devoted to traditional holiday letting are screaming at the lack of demand this year, placing the blame squarely on the shoulders of 'property investors' snapping up properties to place as short lets. The quality is roundly criticised. Landlords accustomed to rental standards are falling short for holiday makers who expect something a little better, not worse, than their own home. Many new properties boldly award themselves 5 stars while failing to deliver so, if you are away on holiday, read descriptions and look at the photos carefully for the cheap beds/sofas/fittings that indicate a newbie.
Profits are down, certainly compared to 5 years ago and also to last years' staycation boom. Owners (thanks to their payment of business rates) received generous lockdown support and the market has definitely cooled for 2022. New entrants have spent a considerable amount renovating and furnishing so will be slow to switch back to rentals. I predict that those on rent-to-rent deals will fail to make profit beyond the Summer as rents are high.
In favour of reverting to AST rental are spiralling private rents and a dearth of available properties in Portsmouth. The big unknown is the recent hike in fuel prices. Short Lets may survive the Summer months but, if my commercial bills from March are anything to judge by, they will seriously impact the business come Winter. Commercial energy suppliers are not obliged to help their clients, unlike the price caps available to domestic users. Those of you with HMOs are also realising the impact and I have heard of many returning to tenant-billing or hiking inclusive rents. Sales of heating controls such as Inspire and Hive are through the roof as we all fear what is to come. Guests in holiday properties expect a holiday from their bills as well. It is usual for the properties to run at 25 degrees while occupied and for them to enjoy taking long hot showers and baths. The stress of micro-managing their usage or charging supplements for greedy guests will not be tolerated in a business where you are only as good as your review score. We can only wait and see what September brings, but I think the rental market in Portsmouth will get a boost of a good few beautifully presented and furnished places for at least the Winter months.
I am blogging off to Scotland for a few weeks, before the seasonal rush starts, in the sharing-economy staple, a camper van, followed by apartments in Edinburgh and Glasgow. First-timer in a van and also in Scotland so I will report back on alternatives to short-term rentals next time.