UK Staycation Demand Encourages Switch from Long-Term to Short-Term Lets
As more Britons opt for a staycation over a holiday abroad, evidence suggests that some private rental sector (PRS) buy-to-let (BTL) landlords are choosing to switch their investment properties from the long-term rental market, to the short-term, holiday lets market. This reverses a trend seen earlier in the coronavirus pandemic and is more in line with the broader trend of the UK's letting market pre-Covid-19.
However, those landlords who are sticking with the long-term rental market are also likely happy with their decision. That’s because recent data shows tenant demand is allowing landlords to raise rents. A survey shows that almost one-third of letting agents have experienced landlords raising rents in the month of June.
Short-term lets deemed profitable once again
While uncertainty and lockdown has hampered the UK’s long- and short-term rental markets, research suggests that some landlords are choosing to switch form the long-term market into the short-term, lured by the prospect of profits as many Brits opt for a staycation in 2020. While this suggests a reversal of activity earlier during the UK’s pandemic, it shows that landlords are keeping a close eye on market demand to make the most of their investment.
According to research from upmarket property management firm Savills, the uncertainty surrounding air bridges and changes in policy means that more Britons than usual are opting to holiday at home and take in the sights of the UK. That trend suggests demand for accommodation will be high, even despite a lack of overseas visitors.
“Hotel occupancy in the South West has made a swift recovery since lockdown restrictions were lifted and with demand for rooms at record levels, rates are also being boosted,” said James Greenslade, Associate Director at Savills Exeter.
Indeed, with hotels in popular holiday locations in the south west coast already at 100% occupancy for the rest of the summer, demand for alternative holiday accommodation is expected to remain strong throughout August and into September.
A dearth of long-term rental homes?
While news that more short-term lets being made available is good news for staycationers and landlords seeking to secure a return on their investment, it’s not such a positive development for long-term renters.
As the proportion of renters in the UK continues to rise, demand for rental homes in popular locations also increases, which in turn put upward pressure on rents. Indeed, according to research from ARLA Propertymark earlier this year, up to 500,000 rental properties could be switch from being long-term to short-term lets.
However, a more recent survey from the same body has highlighted an upbeat development for landlords still operating in the long-term rental sector; demand surged in June, allowing 29% of PRS landlords to raise their rents.
While its likely high seasonal demand for short-term lets will also support higher prices, the lure of higher rents over a 12-month period – or longer – is stronger for many landlords. In addition, the wear, tear and repair in the long-term let sector is lower than for holiday lets. This combination highlights there are still plenty of benefits, from a financial and maintenance perspective, in the long-term rental sector, even when directly compared with holiday lets.