A rental sector management firm believes the impending HMRC tax probes cause short-let landlords to switch to longer lets.

Recently it was reported that Airbnb had agreed with the HMRC to provide details of around 225,000 financial transactions of people who had used its site to let out rooms and homes.

David Alexander, joint chief executive officer of a PropTech rental platform, believes that the HMRC may follow up on the details of the transactions with those who had let out multiple properties through the Airbnb site.

Alexander said: “Since the start of pandemic we have had hundreds of former Airbnb property owners approach us about shifting from short to long term letting. They correctly predicted that nobody would be holidaying or travelling and therefore their incomes would dry up over the course of this year.

“This investigation by HMRC into the income earned by these property owners between 2017-2018 and 2018-2019 means that many more landlords will feel that the short-term letting market is not for them. Indeed, there are some companies which had large numbers of properties hired through Airbnb and other sites which may now face considerable tax liabilities in the coming months.”

He does understand how some landlords and agents find short-lets extremely appealing with the higher rental income model, however he feels that some may have entered into the market without being fully aware of the implications.

Alexander continued: “There are higher rents for short term lets but also greater obligations and costs in terms of managing property. Greater cleaning and maintenance costs, higher insurance premiums, and the expectation that more damage is likely to be caused by a short-term tenant than someone who wants to establish a home in your property. All of these factors alongside potential high tax bills will have put many landlords off remaining in the market.”

He predicts that because of the effects of the coronavirus has had on many landlords’ rental incomes, many could switch from short-lets to longer lets to protect their business.

Alexander concluded: “This, coupled with potential tax demands before Christmas, is likely to see further large tranches of property released on to the long-term letting market as owners seek to recover some of their losses from the first part of the year.”