Mortar and Margins 12
Imagine you are a landlord with a handsome Regency property in Cheltenham. It is a short walk from the centre, all high ceilings and winter draughts. Your tenants are a young couple who have caused no trouble for two years. Then, during Festival week, the boiler fails. You send a trusted contractor round. An unfamiliar face answers the door. Your suspicions aroused, a quick online search reveals your property listed for £2,000 per week on a short-let platform during the famous racing festival.
It is a scenario that neatly captures a growing tension in the private rented sector. Short-term sub-letting during peak events can look like easy money for tenants, but it shifts risk squarely on to the landlord.
Risk without reward
The first issue is contractual. Many buy-to-let mortgages contain clauses restricting short-term or holiday lets. Insurance policies often do the same. A standard policy designed for an assured shorthold tenancy may not cover fire, damage or liability arising from a festival short-let. In the event of a large claim, insurers have a habit of examining the small print very closely.
Beyond compliance, there is a more basic question of risk and return. If tenants are pocketing the premium from a £2,000 per week listing, the landlord is effectively underwriting additional wear-and-tear, unknown occupants and potential regulatory breaches without any share in the upside. That imbalance alone should give pause for thought.
Practical counter-measures can help. Scheduling inspections during known high-risk periods such as festival week is one option. Aligning annual gas-safety checks with those dates is another. These are not fool-proof, and determined tenants may attempt to game the system, but a blend of common sense and foresight can reduce exposure.
Monitoring versus quiet enjoyment
Landlords must tread carefully. The legal principle of quiet enjoyment is central to residential tenancies. Over-zealous monitoring – excessive inspections or intrusive surveillance – risks breaching that principle.
Installing smart doorbells with landlord access, for example, may stray into invasion-of-privacy territory if not handled properly. Routine three-monthly inspections, particularly in long-standing tenancies with no history of issues, can feel heavy-handed. A well-run tenancy relies more on relationships and trust than on constant reference to the contract.
Social media sits in a grey area. Public posts are, by definition, public. Conducting due diligence before granting a tenancy is sensible. Obsessively tracking tenants online after the fact is less so. The line is not legal so much as practical – how much time and energy should be devoted to policing behaviour that may never materialise?
Regulation and the short-let debate
The rise of short-let platforms has sharpened debate around fairness and regulation. Hoteliers argue that they operate under stricter fire, safety and planning rules than individual hosts. Platform advocates counter that short-lets serve a distinct market – groups sharing space, contractors on medium-term assignments, families seeking flexibility.
Government policy sends mixed signals. The rent-a-room scheme allows homeowners to earn up to £7,500 tax-free each year, reflecting a desire to make use of the UK’s millions of empty bedrooms. At the same time, proposals for new planning use-classes and tighter local controls suggest increasing scrutiny.
The balance is delicate. Over-regulation risks stifling flexibility and additional income streams. Under-regulation risks undermining neighbours, local housing supply and safety standards. As ever, the equilibrium lies somewhere between those poles.
For some landlords, short-lets are not about tourists or festivals at all. They can provide accommodation for contractors working on infrastructure projects – stays of several months rather than several nights. In those cases, demand can be steady and commercially rational, particularly where there is year-round activity.
GDP in the slow lane
While landlords wrestle with micro-level risks, the macro picture is hardly dynamic. The latest figures show quarterly GDP growth of just 0.1 per cent, with annual growth at 1.3 per cent . The services sector was flat and construction output fell by 2.1 per cent .
Construction weakness is not a surprise. Purchasing Managers’ Index readings have signalled contraction for months. Budget uncertainty led many firms to defer decisions, and residential development has been particularly soft.
More concerning for households is real GDP per head, which has fallen for two consecutive quarters . When output per person declines, living standards feel squeezed, regardless of headline growth. For landlords, this matters directly. The market may set rents, but affordability ultimately caps what tenants can pay.
London appears to have been at its affordability ceiling for years. Elsewhere, there is still headroom, but the margin is not limitless. Frozen tax thresholds and persistent inflation compound the pressure on disposable incomes.
Credit, supply and the housing market
In housing, availability of credit often matters more than wage growth alone. Real-terms house prices have drifted down over recent years once adjusted for inflation. At the same time, the number of properties coming to market has hit record starts to the year .
Crucially, strong supply has not yet produced gridlock. Demand remains healthy enough to absorb stock, keeping transaction volumes ticking up even as prices stagnate. The result is a market that feels neither exuberant nor distressed – more treacle than turbo-charged.
Regional variation is stark. Some parts of the North-West continue to see pockets of strength driven by regeneration and connectivity. London, by contrast, faces a glut, with prices under pressure.
For landlords and homeowners alike, the message is nuanced. There is no obvious crash, but nor is there easy growth. In such an environment, disciplined risk management – whether around short-lets, financing costs or tenant affordability – becomes more important than ever.
Festival premiums and fractional GDP gains may grab headlines. In practice, steady stewardship and an eye on both micro and macro risks will define success in the year ahead.
Mortar & Margins is produced in Solihull by Propenomix. Its editors are Duncan Hooper and Adam Lawrence