David Alexander asks: Are short-term lets really worth it?

David Alexander asks: Are short-term lets really worth it?

Published on 8th May 2019

David Alexander asks: Are short-term lets really worth it?

David Alexander, who is a rental market expert, is urging landlords to be cautious when considering using short-term lets websites such as Airbnb to rent out their properties.

Alexander, who is managing director of Apropos and DJ Alexander, says current challenging conditions may encourage landlords to view short-lets as an 'easy way out'.

He states that the disadvantages for landlords choosing to let on a short-term basis include longer void periods, higher maintenance costs and considerable political pressure on a market which has been banned or restricted in other parts of the world.   

He cites Airbnb's most recent figures, which show the platform has almost 225,000 active UK listings and generates over £850 million in rental payments, with the average landlord or property owner taking home £3,100 per year. Figures for some of the UK's biggest cities suggest much more lucrative returns, with a typical takeaway of £3,563 per month in London, £1,959 in Edinburgh and £1,595 in Manchester.

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

Airbnb's data shows four key listings areas in the UK: London, Scotland, the South West and the South East - which collectively account for just shy of 75% of all listings on the platform. These four areas account for 78% of all income generated for UK hosts.

"These figures highlight the importance in the short-term letting of having a rental property in the right area," he says.

"The problem 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”.

"With [sites like] Airbnb you may find that you make more money for the peak five or six months of the year, but the winter is completely dead in which case your earnings may balance out," he says. 

"There are a lot of factors to consider, so I would urge landlords thinking of this step to think long and hard before making a leap into the unknown. It will work for some but could be a mistake for others."

The rental expert does highlight the advantages of short-term letting such as higher daily income, fewer legislative, financial and regulatory issues and potentially less punitive borrowing circumstances. "There is still a very good return to be made from the PRS, but it requires a professional approach."

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