Landlords: switch from short- to long-term lets
Is the private rental market about to come full circle, with landlords swapping their short-term and holiday lets, which have recently been in fashion, for traditional long-term tenancies? We are finding the appeal of the long-term let has never been higher, both among tenants and landlords.
Renting out a second property you own, to the holiday-making masses or transient tenants, has been one way to cash in on becoming a landlord, with the term ‘staycation’ and Airbnb working in tandem to fuel the short-term and holiday let market.
The Covid-19 pandemic, however, has exposed one of the less appealing aspects of running a holiday home – uncertainty – with both international travellers and home-grown guests virtually vaporising overnight, earlier in 2020. In fact, the decline in holiday-let demand during the Covid-19 crisis has been so sharp that Airbnb has made approximately 25% of its workforce redundant.
Additionally, a poll conducted among members of the UK Short Term Accommodation Association (STAA) found that since 13th March 2020, most short- and holiday-let landlords had seen around 70% of their bookings cancelled, with some reporting as high as 90%, with proportionate losses in income.
Many landlords will now be busy refunding deposits or wondering how they will cover the bills in the coming months – all with the thought that travel restrictions may happen again and knowing people are becoming more particular about entering a property with a high turnover of strangers.
Landlords are now seeking the certainty of a long-term, traditional tenancy – one where tenants are locked in, by legal agreement, for anything in excess of 6 months. Home movers are also turning to the private rental market in greater numbers, with new tenancy applications in early June 2020 rising above those seen in the same period in 2019*.
This new tenancy surge is, in part, due to a reluctance to commit to a property purchase in uncertain times but also because many home movers are taking the first step towards changing their lifestyle or location – trying out new areas by renting before they buy.
Swapping from a short- to a long-term let
Here’s our advice for those who have been running a short-term or holiday let and would like to switch to a traditional long-term tenancy:-
- Start to ‘wind up’ your short-term let – especially if it is a holiday property – by stopping all online, print and social media activity, and removing online booking facilities.
- Honour all immediate bookings, where safely possible, or start the deposit refund process.
- Organise for the property to be deep cleaned inside and out.
- Decide whether the location of your let is ideal for a long-term tenancy. Take the advice of a local letting agent who will confirm if there is demand and what the monthly rent could be. It may be advisable to sell the property and purchase a buy-to-let in a different area.
- Contact a local letting agent with a property management department. They will advise you on the current legal compliance and tax implications attached to running a long-term private tenancy.
- Speak with your buy-to-let mortgage lender to ensure their terms and conditions allow a long-term private tenancy.
- Instruct an agent and ensure any DIY or maintenance is complete before marketing photographs are taken.
- Decide whether to self manage or hand over the day-to-day tasks, compliance and administration to a property manager so you can enjoy a ‘hands-off’ investment.
- Be meticulous when it comes to finances and record keeping, so you can fill in your self assessment tax return truthfully, or pass on your records to a trusted accountant.
If you would like more detailed advice and step-by-step support when transitioning from a holiday- or short-term let to a long-term tenancy set-up, please contact us today. Our lettings team will be pleased to advise you.
*Goodlord June 2020