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Some rental owners have focused their energies on short-term rentals in response to the pandemic as stays have become the only vacation option for Britons. How is the sector doing now?
Vacation rentals and short-term rentals have become a more common option for real estate investors after the pandemic began early last year. A small number of landlords have been left behind due to the government’s multi-month eviction ban, and the short-term rental industry has become a lucrative option to fill the gap.
House prices have remained strong throughout the pandemic, despite some predictions of a crash. One of the main factors has been the stamp duty exemption, which many investors and owners have also benefited from. For some, where prices are high and returns lower – particularly in London and the South East – short-term rentals offer higher returns.
A study earlier this year showed that short-term rentals in London were 62.7% occupied in June, which was considerably higher than other types of accommodation. Revenue per room was also impressive, according to the UK STAA and STR report, averaging £ 72.90, an annual increase of 59.5%.
Influx of local visitors favoring short-term rentals
In addition to the rise of “staycation,†which has actually been a growing trend since before the pandemic, people are more likely than ever to want to rent an entire property rather than stay in a hotel. For example, the same study noted that hotel occupancy rates in London during the same period were only 40.6%, with serviced apartments at 39.7%.
While a self-contained vacation home normally offers more space and amenities than a hotel, since the pandemic it may also be more appealing to people who wish to avoid sharing facilities with others.
International travel has also increased since restrictions eased, bringing more visitors to the UK in search of accommodation. According to an interview with Advantage Investment, regions such as Cornwall and the Lake District in particular have seen a massive increase in bookings and searches this year. Some vacation rental companies saw a more than 40% increase in bookings in the summer of 2021, according to the report.
Will they remain an attractive investment?
“Domestic holiday experts predict that UK holiday demand is here to stay, at least for the next 4-5 years, opening up lucrative investment opportunities in holiday property rentals,†says Advantage Investments.
While many investors and landlords might prefer to stick with the proven traditional rental purchase, it seems they would be wise not to overlook the opportunities available in short-term rentals.
Especially as people become more aware of the environment, even as the aftershock of the pandemic eases and opens up international travel, a growing number of people will still choose to stay local. Another important avenue to consider is short term rental for business use away from typical vacation destinations. With more people than ever working from home and choosing to relocate further from their desks, it is likely that the number of people coming to a workplace for a few days and seeking short-term accommodation nearby is likely to increase.
How to invest
“For people who want to take advantage of the UK travel trend, there are plenty of lucrative opportunities,†Advantage Investment says. “Which choice is best for you will depend on a number of factors including how much capital you have, how quickly you want to see returns and how long you want to be tied to the investment.
“Another important consideration is the effort that will be on your part, as some investments allow you to invest and take a step back, while others will take a lot of time and input.”
BuyAssociation has a number of properties available to investors where short term rentals are an option. There are also furnished vacation rentals open for investment in popular Cumbria, with net returns of up to 10%. Contact us for more information on this as well as for our buy-to-let and build-to-let opportunities.
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