UK: The Scottish capital has the fastest growing residential rents in the UK as landlords opt for short-term rentals over ASTs.
According to a report in The Times, growing numbers of families and young professionals are losing their homes as landlords opt for the short-term lettings market — particularly over the festival and Hogmanay — where they can double their earnings.
Edinburgh lets on Airbnb have doubled to 12,000 since 2016, which city leaders say is partly to blame for the loss of up to a third of the private rental stock in some areas. And a lack of regulation is encouraging landlords to switch to holiday lets, which do not require the same stringent safety checks as the traditional rental market.
“The problem is a complete imbalance,” said Rob Trotter, a partner at the lettings agency D J Alexander. “If the short-term market had regulations of its own, with safety checks and certificates and minimum standards, it would be an even playing field. But at the moment we’re saying, ‘If you come to the long-term market you’re going to have to spend all this money doing this, that and the other’. There are all sorts of codes of conduct to comply with, there’s less of a tax incentive. Versus rent on the short-term market — you don’t have to do anything, you can collect loads of money and there’s virtually no cost. That’s where the imbalance has arisen. What we’re seeing is a race to the bottom.”
Edinburgh has the most rapidly accelerating rents anywhere in the UK, with prices rising four times faster than the national average. The Scottish parliament is consulting on whether it should regulate such letting amid calls from councils, politicians and tourism bodies for clearly defined rules.
Landlords must apply for a change of use if they want to use a property for full-time letting. Council officials regularly turn down such applications and investigate unauthorised lets.
Professional landlords are also dominating the short term rental space. In one residential development in Western Harbour, Leith, a lettings company was found to be operating 40 properties within a block. One flat had been converted to a linen closet and the cleaning regime was “akin to a hotel”. One in ten properties in Edinburgh is let by someone with ten or more listings on Airbnb, and the council says that commercial lets are responsible for most problems on the site. The biggest hosts are letting agents specialising in the holiday sector, some of whom tell landlords that they can make more money by changing to short-term lets.
A spokeswoman for Airbnb said: “While guests travelling on Airbnb accounted for just three per cent of visitors to Scotland in 2018 and entire homes on Airbnb account for less than one per cent of stock, our community boosted the economy by more than £693 million last year.”
Last year Grant Property reported that 75 per cent of house buyers in Edinburgh are from outside Scotland.
Andy Wightman, Green MSP for Lothian, said: “Most commercial lets in Edinburgh are probably unlawful and are removing housing from the market. Because there’s no register of short-term let landlords, these things don’t tend to be drawn to your attention. That’s why they’re violating the rules, because they don’t know. They think, ‘I’ve got a flat, I’ll stick it on Airbnb’. Airbnb don’t know what the rules are, they’re a global corporation.”
Kate Campbell, housing convener at the city council, said: “There is already a lot of pressure on housing supply in Edinburgh; having this unregulated, almost unknown issue coming in and impacting on it is very worrying. We’ve got 12,000 properties at a time when local government resources are under pressure. It’s challenging.”