Regulation of the up-and-coming market could reduce negative experiences and enable more people to benefit from the availability of short-term rentals, according to lettings payment automation provider, PayProp.
The fast-growing lettings market, although offering advantageous opportunities for landlords and letting agencies, could be improved by means of regulation and making the organisation of short lets more professional. A system more similar to longer-term lets is required to provide all stakeholders with the necessary protection.
Rapid growth over short term
The short-term lettings market has grown swiftly in recent years due to the flexibility it offers tenants and the high yields landlords are able to obtain. Furthermore, the upsurge has resulted in the creation of many new management opportunities for letting agencies.
Neil Cobbold, Chief Operating Officer of PayProp UK, has commented: “The rapid growth of this market demonstrates a definite appetite for this kind of accommodation. However, short lets could benefit from regulation in order to create and maintain sustainability.
“Currently, there is no mandatory regulation of short lets, which is surprising because landlords letting a property long-term now have to comply with 156 regulations, a 32% increase in just nine years, according to the Residential Landlords Association (RLA).”
Horror stories prove need for regulation
Several high-profile cases have shown that regulation of the short-term lettings market could have protected tenants, landlords and agents from rogue operators and scammers. BBC One’s Inside Out programme recently exposed the extent of illegal subletting via short-term lets websites.
One such example featured a London agency of property specialists which discovered tenants checking a family into an apartment it was managing for a client. The flat was further found to have received more than 70 reviews on Airbnb.
Even Lord Sugar, Apprentice star, has claimed recently that scammers had used images of one of his London properties to create a fraudulent Airbnb listing, swindling a group of American tourists out of $600.
Cobbold has said: “The amount of reports of short-term lets being mismanaged or used to scam consumers seems to be increasing.
“A likely contributory factor could be the unregulated nature of the sector, which fraudsters view as a fast-growing market offering opportunities to make serious amounts of money quickly while imposing very few rules.”
The UK isn’t the only country suffering
Similarly to the UK, other countries appear to have growing frustrations over short-term rentals and have taken their own approach to Airbnb regulations, despite the booming market demand and economic benefits.
Countries such as San Francisco, Berlin and Barcelona have all implemented more stringent regulations to control short-term rentals, such as monetary fines and tourist licenses.
Different regulations seem to have had different effects, but are they taking the right approach to flexible property management?
Initial steps taken
A new industry-specific trade body has been launched recently, in response to the growing amount of negative publicity concerning the short-term lettings market.
The Professional Host Alliance (PHA) has declared its mission to ‘accelerate the professionalisation of a sustainable, global short-term rental sector and increase trust in the home-sharing economy’.
Cobbold concluded that the launch of a trade body for short-term lettings agencies was good news and ideally will gather momentum by signing up some of the industry’s best-known names.
The introduction of additional rules for short-term landlords and agents as well as minimum standards for hosts could represent how progress develops in the future.
Without doubt, managing short-term lets provides letting agencies with fantastic opportunities. However, there needs to be greater parity with the traditional private rental sector for this new source of income to be safe and successful ultimately.
We asked Nakul Sharma, CEO and Founder of Hostmaker for comment:
“Against the backdrop of a seismic market appetite for short lets, the stage is clearly set for a fresh approach to regulation to ensure the opportunity remains scalable and sustainable. The latest round of regulatory changes should in fact be viewed as a proactive step forward in making short-term letting easier, safer and more efficient.
“Greater clarity in local and national legal frameworks will contribute to the ongoing growth of the sharing economy. To achieve this, letting platforms, local councils and property management companies must work alongside each other to encourage flexible letting models that allow new segments of the population to access the benefits of varying types of property ownership. Collaboration across the board is vital to ensure current and future regulation benefits all parties involved.”