Holiday lets boom appears to be fizzling out

Holiday lets boom appears to be fizzling out

0:03 AM, 19th June 2024, About 3 weeks ago 2

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The UK’s short-term rental market appears to be running out of steam with a new report highlighting a rise in listings – but a worrying drop in occupancy rates and revenue.

The research from lettings and estate agent Benham and Reeves looked at key market metrics across popular holiday destinations.

While the number of short-term rental listings has climbed in most areas, occupancy rates have dipped significantly.

It says there are more than half a million active short-term listings currently in the UK.

Landlords and the short-term rental market

Marc von Grundherr, a director of Benham and Reeves, said: “Many traditional landlords have succumbed to the allure of the short-term rental market in recent years, as they’ve looked to boost the profit margins of their rental portfolio following a string of legislative changes to the PRS sector.

“This is a trend that has continued over the last year with the vast majority of areas we analysed seeing an increase in active listings.”

He added: “However, the data also suggests that the heat may be dying down with respect to consumer demand, with occupancy rates falling significantly and denting annual revenues in the process.

“As a result, it seems as though short-let providers have ramped up daily rates in order to compensate, but this is a tactic that is unlikely to resonate with consumers given the current economic landscape.”

Nationwide surge in short-let listings

The firm’s data reveals a nationwide surge in listings, with London leading the way with more than 52,494 active lets, a 22% increase year-on-year.

Manchester is close behind with a 29% rise, alongside notable growth in the Peak District, the Lake District and the Cotswolds.

However, this surge in supply hasn’t translated into higher profits.

All 10 locations saw a fall in occupancy rates compared to last year, with Devon, Dorset and the Cotswolds experiencing the most significant drops.

That meant that annual revenue growth has remained stagnant for most areas, with some even experiencing a decline.

Short-term let owners saw yearly revenues dip

Short-term let owners in Devon, Cornwall, London and Manchester saw yearly revenues dip, while other regions like Dorset and the Cotswolds saw minimal growth.

To counter these losses, the owners have resorted to raising average daily rates.

Edinburgh, the Lake District, Somerset, the Peak District and Cornwall have seen the most substantial price hikes.

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Cider Drinker

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9:15 AM, 19th June 2024, About 3 weeks ago

I will either be selling my BTLs when tenants leave or I may consider making some of them holiday lets. Demand seems to be reasonably high in Summer months, even in areas that you wouldn’t immediately think were tourist destinations. Just 30% occupancy required to match BTL income.

Robert Sled

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10:09 AM, 22nd June 2024, About 3 weeks ago

Why would raising prices makes the business more successful? If my hotel is empty, I don't need to raise the prices - I need to lower them

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