The Government is looking to crackdown on properties being used as short-term rentals. Will this affect you
In the past two years since the pandemic, city-dwellers have taken to country and seaside settings in droves. They have flocked to Devon,Cornwall, North Wales, the Lake District and many parts of Scotland. Local residents are pushing back, and want homes to be bought by locals – not by investors and second-home owners.
The Government’s new levelling up bill offers local councils the freedom to double council tax on second homes in England as a deterrent.
So, will these proposed changes affect landlords? Let’s find out…
Will the changes affect landlords?
We know many buy-to-let landlords, faced with increasing regulations, taxation, and the latest proposals contained in the Government’s White Paper may look to switch to short-term lets over long-term. It’s worth exploring the council rules in the area you’re looking to invest in. Some people believe that holiday lets are contributing to making house prices increasingly hard to afford for a growing number of local people.
Are short-term lets better business?
Although they can (in theory) achieve higher rates than long-term lets, short-term lets undoubtedly involve a lot more work. They are classed as a business, as opposed to an investment income, which can reap some tax benefits but it all depends on what you’re looking for as an investor. If you’re looking for immediate cash injections then short-term letting could work well – but there’s no security with this strategy and, often, holiday properties can sit empty when out of season. If you’re looking for a regular income, and longer-term security, buy-to-let is a fantastic option.
Is buy-to-let still worth it?
No investment is without risk but if you take a long-term view of it, buy-to-let can really work for you. It’s not a get rich quick scheme but there is a good income to be made if you go in with your eyes open. Although some of the recent changes make buy-to-let less attractive to some investors, if done right, it still remains profitable. High tenant demand and incredible rental yields of late make long-term lets an attractive option. Plus, the capital growth makes investing in property even more lucrative.
UK average rent rises again to a new record high of £1,113 per month
It’s worth remembering that whilst there are great profits to be made from holiday lets, the private rental sector offers record high rents currently. According to Homelet data, the average rental price in the UK for June 2022 is £1,113. Excluding London, the UK average is now £936 PCM. Raising money for a deposit doesn’t happen overnight but if you educate yourself, surround yourself by property experts and buy in the correct area, there are still great profits to be made.
If you do decide to rent out your property, should you use an agent to manage your property?
Regulations are a huge factor to consider. You need to keep safe and legal, and one of the best ways to ensure this is by using an expert letting agent. For example, landlords currently need an Energy Performance Certificate (EPC) with a minimum rating of E. Later this year there are new regulations being introduced which will make the installation of carbon monoxide alarms a requirement. You also need to conduct electrical safety checks every 5 years and gas safety checks each year. Sometimes having an agent there to handle these intricacies can be really beneficial. It gives you peace of mind, reduces your workload and frees up your time.
So, what’s better – short term or long term tenancies?
With short-term rentals you have to market them heavily in order to fill the property, plus you have to deal with regular changeovers, more wear and tear, plus paying all bills on the property. There’s no doubt that buy-to-let investments also require a little time and effort – you’ll need to research and buy the property and then manage the investment from then on. However, switching to long-term tenancies dramatically reduces the amount of work needed to manage the property and, if you do opt for an agent, it can be fairly hands off. As for the future of short-term holiday lets, we will have to wait and see.