Airbnb has had a significant impact on housing markets in many of the countries in which the company operates. From a small startup, the company evolved rapidly into a prominent global player that has changed housing and hospitality trends to a great extent.
However, the global COVID-19 crisis has seen the company, and others like it, take a significant hit, with ripple effects across the markets. The impact of lockdowns across the world on both the number of tourists and corporate relocations into the UK has resulted in some property owners choosing to move their short-term rental properties onto the long-term rental market.
A recent study has shown that over 12% of properties coming onto the rental market in inner London since May have previously been an Airbnb or other short-term rental property. The number of homes available to rent in Inner London is up by over 40% vs. a year ago, resulting in downward pressure on rent prices.
Rents across Greater London fell over 4% in July vs. the same period a year ago, led by a record drop of 8.4% in Inner London. In total, over 35% of homes in London which had previously been advertised on a short-term basis are now being offered for long-term occupation.
However, property owners that are switching their property from short to the long-term rental are suffering from a significant reduction in revenue. This steep reduction of over 35% translates into £1,900 per month on average. For many property owners, this situation has taken them from a lucrative income to a substantial loss, often without contingency plans or financial buffers to cushion the hit.
While the COVID pandemic is a unique, unexpected event that has had a major impact on most sectors in the economy, it is still, unfortunately, a strong example of the need for balancing short term portfolios with long term assets that are much less susceptible to fluctuations, crisis situations, and adverse events. Those who have balanced their portfolios and provided for contingencies are weathering out the storm much more favorably, while those who have relied solely on short term rental properties have taken a significant hit.