Short-term rentals – how big is the problem?…
Timothy Douglas, Head of Policy and Campaigns at Propertymark, analyzes the impact that the lack of available data is having on the rental market in communities across the country.
We have known for some time now that concern is growing among our members operating in parts of the UK where levels of private rental housing are being reallocated to the short term rental market, depleting much needed stock to meet local housing needs. level.
However, as we hear these concerns from officers in the field and evidence emerges to support worrying trends in some areas, we must acknowledge the lack of official data to help truly understand the problem – we cannot not start trying to solve a problem that we just don’t understand.
The short-term rental market presents itself as a more tax and regulatory favorable option for existing and potentially new portfolio owners and increased costs in the private rental sector are an inevitable result in areas where the Tenant demand exceeds long-term rental supply.
Tourist accommodation can be very positive for communities, but there comes a tipping point and the balance between long-term and short-term rental accommodation has tipped too far in favor of the short-term segment of the rental market.
Recently, the UK government decided to close the business rate loophole, which has allowed some secondary homeowners in England to avoid paying council tax. We believe this is a step in the right direction, but it is long overdue and not sufficient in terms of the intervention needed to sustain investment in the private rental sector and that it needs to undertake further investigations and changes, including launching a review of all taxes relating to the private rental sector. owners.
In Scotland, additional measures are being taken to address the problem of short-term rentals in some areas, including approval of plans by the Scottish Government’s Local Government, Housing and Planning Committee which will implement compulsory short-term rental licenses by 2024. , and in conjunction with the creation of control zones, in which planning permission will be required to use a property for the purpose of short-term rental .
A number of proposals have been bought up by the Welsh Government, including extending the powers of local authorities to enforce a council tax premium, a requirement for planning permission and the ’70 day’ criteria used to define a property as a short term rental for commercial purposes is already in place.
Local authorities have data on the number of second homes registered for council tax across the UK, but this data does not tell us how many of these second homes are rented out in the short-term rental sector.
This data gap is caused by the lack of definition and the lack of an existing framework to categorize second homes – without this we will not be able to understand the market. It follows that governments need to develop a robust typology that defines definitions of each type of second home based on use so that data can be captured.
By defining each type of second home, it will provide a more accurate picture of housing use at national and local level, which can lay the groundwork for smart policy in this area, minimizing the risk of unintended consequences.
We have proposed a solid base of three categories to differentiate between secondary residences which are, primary residences which are owner-occupied or rented to tenants as a primary and primary residence, secondary residences which are property not inhabited by their owners as their primary residence but which are used by the owners on a one-time basis, and short-term or vacation rentals which are properties for commercial use through short-term rentals throughout the year.
All governments must now consider measures that will help level the playing field between a more tax-friendly and unregulated short-term rental industry and the less tax-friendly and intensely regulated private rental sector.
We believe that to do this, governments need to significantly increase the supply of social rental housing in areas that need it most, explore ways to rebalance regulatory obligations between the two industries, develop a robust typology to define different categories of secondary residences and pilot the introduction of a registration system for short-term rentals using the proposals set out in the Airbnb white paper.
The private rental sector plays a key role in the country’s recovery from the Covid-19 pandemic, and we hope that all governments will act quickly to limit the potential negative impact this imbalance will cause.
*Timothy Douglas is Head of Policy and Campaigns at Propertymark