The ongoing potential attached to short-term rentals
As the travel and hospitality sectors continue to battle ongoing challenges, these are areas which landlords and investors are keeping a close eye on in a bid to increase yields and diversify their portfolios. Holiday and short-term lets have risen in prominence over the course of 2021 to reflect ongoing international travel limitations, the rise of the staycation and the attraction for Airbnb-type properties.
This trend is likely to continue as opportunities are becoming more evident for property professionals in urban areas, as well as coastal areas, as the UK gradually opens its borders to more tourists. In addition, some workers and their employers are opting for short-term lets as more flexible and secure places to stay whilst heading back into their London offices.
This was reflected in recent data which showed that London’s short-term rental market is continuing to perform very strongly, with serviced apartments leading the recovery following the pandemic. Performance data to the end of September 2021 from a tracking study conducted in partnership with the UK Short Term Accommodation Association found that short-term rentals averaged 76.2% for September – an increase of 6.9% on August and 29.3% up year-on-year.
Occupancy for serviced apartments averaged 81.5%, a 6.8% increase on August and a 60.6% year-on-year rise. In contrast, hotel occupancy averaged 62.4% – up 10.5% on August and a year-on-year rise of 111.6%. Short-term rentals led the way for average daily rates in September averaging £151.40, up 9.4% on August and 38.6% year-on-year. Serviced apartments earned an average of £150.60, a rise of 10.8% on August and 24.0% up year-on-year. Hotels averaged daily rates of £138.50 which was a monthly increase of 23.3% and a year-on-year uplift of 48.7%. The average length of stay for short-term rentals also rose in September to 18.8 days from 14.3 days in August.
This data demonstrates the vast potential attached to short-term rentals but it’s important to point out that this property type is not without its fair share of risks. And it remains important for landlords and investors to seek out good professional advice, complete their due diligence and have a robust support network in place to maximise this potential and help negate any risks.