In a surprising twist, investors running holiday let properties through platforms like Airbnb have raked in higher earnings than their counterparts in the long-term rental sector, according to a comprehensive study of HMRC data conducted by Hamptons.
The analysis reveals that holiday let owners pocketed an impressive £15,600 over the past year, surpassing the earnings of buy-to-let landlords who managed to amass £13,400 during the same period.
This marks the first time that income from holiday lets has outpaced buy-to-lets since the 2020-2021 period. Unquestionably, the disruptive impact of the Covid-19 pandemic has played a role in shaping the market dynamics. However, it is worth noting that the upward trajectory in revenue for holiday lets has been evident even before the pandemic hit, raising concerns among government officials.
David Fell, a senior analyst at Hamptons, commented on the emerging trend, stating, “While Covid undoubtedly distorted the market, the longer term upward trend in revenue predates Covid, and it’s a trend the government has been increasingly worried about.”
A decade ago, holiday lets generated an annual income of approximately £9,600, lagging behind the £12,800 earned through buy-to-let properties. However, the disparity has grown significantly over the years, with holiday let income witnessing an impressive average growth of 63% over the past decade, compared to a mere 5% for buy-to-let landlords.
The data reveals that around 63,000 individuals, rather than companies, now receive income from approximately 65,000 furnished holiday let properties across the UK. This marks a substantial increase from 46,000 individuals earning income from 50,000 holiday let properties back in 2011-2012.
Tim Farron, the Liberal Democrat MP for Westmorland and Lonsdale, recently expressed his concerns about the situation in an article for The Times. He wrote, “I’m very sad to say that wonderful and iconic towns and villages… face an existential crisis – a housing catastrophe, which means fewer and fewer homes for people to live in.”
Farron identified three main causes for this dire situation, namely, the shortage of genuinely affordable housing being constructed, the excessive number of second homes displacing permanent residential accommodations, and the rapid growth of the short-term rental sector, which has eroded the long-term private rental market.
As the holiday let sector continues to flourish, policymakers face mounting pressure to address the challenges posed by this shifting landscape, with a particular focus on ensuring the availability of affordable housing options and striking a balance between short-term rentals and long-term residential accommodation.