New data from Hostmaker suggest that Brexit fears are changing how buy-to-let landlords use their properties, increasing the use of short- and mid- term lets to better negotiate the outcome on October 31.
How Has Brexit Affected The London Property Market
Sales of London homes fell sharply following the Brexit referendum in June 2016. Earlier this year as parliament twice voted down the Prime Minister’s draft withdrawal agreement – in January and March – confidence fell further. In the first quarter of this year, London saw 23 per cent fewer homes sold than during the same period a year before, according to LonRes.
But over the same period the number of customers using Hostmaker increased by 62 per cent.
Landlords and Homeowners Holding Onto Property
“Hostmaker’s recent growth demonstrates the greater appeal of flexible shorter duration lets to landlords waiting to see how Brexit turns out,” says Nakul Sharma, CEO of Hostmaker. Not being tied into long-term lets means that landlords will be able to move quickly if they decide, following October 31 when the UK is due to leave the EU, to sell their property.
Hostmaker, which provides a complete listing and pricing service for landlords, combines traditional long-term lets (more than 90 days) with short- and mid-term lets, depending on the time of year – short-term lets are more popular in summer, for example – and fluctuating demand.
“This shift also demonstrates that landlords are realizing that they can achieve greater profits,” says Sharma. Helped by the greater prices that shorter term lets can achieve, Hostmaker customers in London earn on average 39 per cent more for their property than the London average.
Sharma said that more flexible rental periods have also become more popular with London tenants, who fear what Brexit will mean for their job prospects. In July Deutsche Bank announced it would cut 18,000 jobs – roughly a fifth of its global workforce – with many of the cuts likely to come in London.
Fears about Brexit have compounded the burden of recent tax changes for landlords. A combination of the 3 per cent stamp duty on second homes and the phasing out of mortgage interest tax relief is increasing costs. Those in London must contend with falling capital values too: down 4.4 per cent in the year to May according to the latest figures from the ONS. In a survey by the Residential Landlords Association in the spring, one in four buy to let landlords said they were planning to sell at least one property over the next year.
Sharma encouraged landlords considering using Hostmaker to act now, noting that average rents through Hostmaker in September are 8 per cent higher than the annual average.