The Daily Telegraph - Saturday - Money
Holiday lettings boom triggers rental supply crisis
Investors rushing to profit from the British staycation boom have helped to destroy rental markets in holiday home hotspots, leaving tenants with nowhere to live.
The supply of rental properties in many popular locations has collapsed because buy- to- let investors have moved long-term lets on to the shortterm market en masse.
Exclusive data from property website Rightmove showed that the supply of long-term rental properties on the Isle of Wight in June and July had plunged by 82pc compared with the same period in 2019.
This means that less than a fifth of the properties that were available to rent before the pandemic are now on the market.
All of the 10 locations that recorded the largest falls in rental supply were holiday resorts. All but West Devon, where supply dropped 76pc, were coastal. In North Devon, rental supply collapsed 80pc, while in Northumberland and South Tyneside in the North East, they were down 74pc and 73pc respectively.
The shortage of property for rent has increased competition among tenants. Across the top 10 areas, tenant demand for every available property (the number of tenants inquiring compared to the number of available listings) has more than quadrupled since 2019. In Blackpool, where supply has dropped by 74pc, competition has jumped 517pc.
On the Isle of Wight, competition soared by 376pc. Ben Hollis, of Lancasters estate agents, said: “Normally, across the whole of the Isle of Wight, there will be 200 properties available. Today, there are 18. There was a point a few weeks ago when there were four.
“Now we leave a rental property online for an hour, and that will generate 30 inquiries.”
Limited supply has created a vicious cycle as desperate tenants try to secure places to live. Some tenants have offered to pay a year’s rent in advance in an attempt to secure a home, said Mr Hollis. The supply shortage means that tenants are in a “Mexican standoff ”.
Nobody is prepared to move first, for fear they will not find anywhere to live. Craig Webster, of Tiger Sales & Lettings in Blackpool, said: “We’re seeing more tenants staying put, which means a lack of movement in the market and new rental homes becoming available.”
Renters are also asking to sign longer- term tenancy agreements, which in turn has put further pressure on supply, added Lawrence Williams, of agent Webbers Property Services in Devon and Cornwall.
Sarah Coles, of stockbroker Hargreaves Lansdown, said: “You need to be armed with the best possible references and have a spotless payment record, or you will lose out.
“It means that anyone who had to ask for help from their landlord during the crisis could find themselves struggling to find a new place to live.”
Travel restrictions, the cost of the Covid tests necessary to get flights, and changing quarantine restrictions have brought a boom in British holiday bookings that has extended beyond the traditional peak season and looks
‘Across the Isle of Wight, there are usually 200 rental homes available. Today, there are 18’
set to continue into 2022. Rising prices mean landlords can achieve higher yields on holiday lets than before the pandemic and, crucially, over longer periods of time. They also have better tax arrangements than buy-to-lets.
Data from property management site Guesty showed prices of September short-term let bookings were up by 54pc on the same period in 2019. Those booking Christmas stays were already spending 44pc more.