The London property market has been hit with a surge of short-term rentals from websites such as Airbnb. With Corona virus spreading around the world, tourists are avoiding the city and the result is more rental properties opening up to residents. That kind of influx of properties has led to reduced rents all around in the capital.
Many areas in London saw more properties being offered for over 10% less than the average in the two weeks from March 9 compared to last year, according to property data from Zoopla. The richest parts of London saw the deepest cuts, with cuts of 5.4% across Chelsea, Kensington, and Westminster.
The added pressure placed on rents is most likely coming from people putting houses and apartments from services such as Airbnb on the standard – not to mention cheaper – rental market with tourism plummeting due to coronavirus. The number of rental listings in London rose 45% in the week beginning March 16 compared to last year. Similar trends have been spotted in other popular tourist destinations, which would back up this theory.
This sudden drop in the demand for short-term holiday rentals represents just one of the ways in which coronavirus is having an impact on the London housing market. The outbreak has caught out many a landlord, broker, and bank and left them unsure of what to do. The government put down a virtual freeze on housing transactions that hasn’t helped matters.
For their part, Airbnb have seen a drastic drop in bookings of 40% across major cities and holiday destinations. Airbnb reassured people that there were just as many listings as ever and that the data wasn’t taking all of the information to account.
All of this does mean that investors who built their portfolio on high rents across the short term are facing something of a crisis. They could continue to let their properties stay empty until demand returns, or they could make their properties available in the long-term. It would mean less money but less money is better than no money. There’s no telling how long the outbreak will last so it’s a difficult choice to make.
Experts believe there will be greater financial stress in areas with a lot of short-term rentals. If landlords aren’t able to pay their mortgage off it could lead to more selling in the sector. The result would be a drop in land registry sold prices across the board, not just with rental properties.