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Landlords – beware of moving to holiday lettings amidst Airbnb crackdown

Proposals for regulatory and financial changes to the status of Airbnb in Scotland and Bristol, aimed at curbing the growth of holiday letting outlets, could impact on the future viability of many properties.

That is according to Apropos by DJ Alexander Ltd, which has previously warned landlords to be cautious of Airbnb, and believes that many landlords have been tempted to shift their properties onto short-term holiday letting as the returns of traditional letting have declined.

In Scotland, Airbnb have 31,000 active listings earning hosts £129 million in total, with average annual earnings of £3,800 – the highest of any part in the UK.


Although Airbnb listings are found across the UK there are four key areas where the majority are located: London, Scotland, the South West and the South East, which collectively account for 73% (163,000) of all listings (223,200).

These four areas also account for 78% (£666 million) of all income generated for hosts in the UK.

“Many landlords have felt tempted toward short term letting with its potentially higher returns at a time when margins in the private rented sector (PRS) are being squeezed,” David Alexander, joint managing director of apropos by DJ Alexander, comments.

“This financial squeeze, coupled with government cuts to tax reliefs, has meant that many landlords have viewed Airbnb as an attractive option. But the proposed changes in Scotland and Bristol to the way in which the holiday lettings market is regulated could produce more problems than traditional long term letting.”

He says Airbnb appears to be targeting this market by highlighting potentially substantial earnings for owners who join its site. While its official data states that average earnings for Airbnb hosts are just £3,100 per annum (which is unlikely to attract many landlords), they also provide potential revenues specifically for different cities which are much more appealing.

For example, it states that property owners in London could earn £3,011 a month; £1,451 in Edinburgh, £1,518 in Manchester, £1,454 in Bristol, £1,519 in Leeds, £1,372 in Newcastle and £1,099 in Birmingham – with differing figures across the UK.

Alexander says these numbers will appear very attractive to landlords who have falling rents in real terms, lower tax incentives, and increased management and maintenance costs.

He continues: “There are, of course, pluses in short term letting on Airbnb and other websites. The daily income is higher than long term letting. To date, there have been fewer legislative, financial and regulatory issues; and it can be less punitive, in some circumstances, for borrowing.”

“But the announcement that Scotland and Bristol are going to attempt to control the growth of holiday lettings is a clear warning sign for anyone considering shifting into this market.”

Alexander explains if restrictions are imposed on how many days properties can be let, or limits on the areas in which properties can operate, then it becomes a less plausible option. Another issue is that there is more work involved in dealing with 50 guests a year than in two permanent clients staying for a year.

“It is a balance and will depend on your expectations, your current experience of where your property income is going, and your location,” he adds.

“It is clear that Airbnb and other holiday lettings outlets are attracting a lot of negative publicity due to their enormous expansion over a relatively short period. They undoubtedly provide a service but the light touch regulation which they have enjoyed to date is unfair to existing landlords and property providers.”

“Therefore, the introduction of greater regulation and control is welcome and inevitable and should make landlords and others think clearly about whether holiday letting is the way forward or simply a temporary blip in the market.”

He concludes: “The genie is out of the bottle so Airbnb will be with us for a long time but perhaps not operating in the way they have so far.”


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