While we’re not particularly fond of the term “trends” here at Word On The Street, it’s undeniable that shifts are occurring within the property industry, and it would be unwise to ignore the current trajectory of the market.
The direction is moving towards more serviced accommodation and Airbnb-style transactions. This may be because as interest rates have risen, investors have sought to maintain similar returns on their investments, which has led them to become more creative in their approach to property investing.
As a result, there has been a noticeable increase in investor interest in Airbnb, serviced accommodation, and Houses in Multiple Occupation (HMOs). Though HMOs provide more permanent residences compared to the short-term nature of Airbnbs, both offer investors ways to stabilise their returns during these financially turbulent times. In fact, over the past five to six years, investors have largely pivoted towards the social housing and “staycation” markets post-COVID, as these have opened viable alternative investment opportunities.
However, upcoming legislative changes may significantly impact this landscape. For example, recent regulations prohibit the use of holiday homes or second properties as Airbnbs for additional income. Consequently, our pipeline is filled with discussions around legislation, holiday lets, and serviced accommodation, as we try to anticipate what the future holds for this space.
Airbnb investments are no longer limited to traditional holiday destinations such as coastal towns or the countryside. Increasingly, demand for Airbnbs is centred on event locations, such as the new Co-op Live arena, as well as in close proximity to urban services and amenities. This has, in turn, broadened the opportunity for investors and landlords interested in these assets.
Alongside this, the flexibility of the space is finding a corporate angle, with many of these HMOs being used by six or more individuals, with companies often taking the whole property for their employees during training days, corporate events, or company short stays.
As well as this, you also have CICs (community interest charities), registered providers for vulnerable tenants, or the asylum seeker market which, although a hot topic, is a key factor in social housing investment at the moment.
Furthermore, the property market is also seeing a resurgence in the conversion of commercial spaces to residential units, particularly in areas where retail vacancies have increased. This raises questions about whether the introduction of permitted development rights has been effective in creating much-needed homes while maintaining ground-floor retail.
As a mortgage broker dedicated to helping property investors grow their portfolios and achieve financial security, we’re exploring the pros and cons of individual Airbnb investments versus corporate let arrangements. The optimal choice depends on factors such as the investor’s experience, risk appetite, and the specific geographical location and market conditions.
Ultimately, the decision-making process involves carefully weighing the unique circumstances of each investor and investment opportunity, taking into account the current market dynamics, legislative changes, and the investor’s resources and expertise. At Word On The Street, we pride ourselves on finding the perfect funding solution to realise our clients’ potential, especially in a market as exciting as this one.
