Owners can win if they offer short-lets as an amenity in their buildings
Airbnb and its short-term rental model have shaken the hospitality industry, introducing a hybrid – residential and hospitality – that can help UK institutional investors in built-to-rent property gain a competitive edge.
Airbnb grew slowly in London, but it picked up quickly. According to data from InsideAirbnb, the rise of Airbnb in the capital went from 215,000 rentals in 2014 to the whopping 935,000 in 2017. By 2020, Airbnb’s yearly revenues are expected to top $8.5 billion.
The company came at a time the market needed supply of a new type of service that directly catered to the needs – affordability, flexibility and home-like experience – of a generation expected by experts to face a lifetime of renting. Especially after the global financial crisis opened a bigger gap in the house-prices-to-earnings ratio, leaving the idea of purchasing a home among young Brits as unrealistic. Reports show that by 2025, more than 50% of adults under 40 are expected to rent privately.
At first, the Airbnb-type model may seem unorthodox to institutional landlords and property managers who are looking to increase their rental yields from long-term leases. But coupled with the fact that many long-term residents are already renting out illegally their units on Airbnb, BTR owners and landlords have a chance to regulate the process, eliminate void periods, and earn extra by responding to the growing demand for short-term stays in their buildings.
Amidst the growing demand for short-stays, institutional landlords are faced with a tough question: How do you capitalize on this new market and technology – and allow your residents to do the same – while maintaining control and transparency?
Partnering with a proptech company such as STAYKEEPERS, offers institutional landlords a holistic solution that makes the difference between successful BTR short-term rental programs, and short-term rental programs that bust. The benefit of such collaboration not only opens new revenue streams, but it also replaces traditional processes; making leasing, managing capital projects, and underwriting for investment deals more efficient, thus contributing to the bottom line of property developers. Furthermore, a proptech company pursues compliance and through in-house developed software permits stakeholders to oversee the process from anywhere in the world.
Working with a STAYKEEPERS-like company helps BTR owners differentiate themselves from the rest by introducing an upscale short-term hospitality experience and technology that save money, generate revenue and benefit both residents and owners.
The UK Tenant Survey 2017, produced by Knight Frank, shows that three things are a priority when people choose a property for long-term leasing in the private rented sector (PRS): affordability, location, and size. We can say it comes down to cost and convenience.
At present, many long-term residents are already trying to offset their rental expenses by illegally letting their units on Airbnb. To a large extent, who can blame them, about 26% of those renting form mixed households to share rent, because they can’t afford it on their own. Moreover, data shows that 35% of renters give more than 50% of their income for rental payments. However, helping rent bills with unregulated letting creates liability and security concerns for building owners and threatens the wholeness of residential communities.
These factors all contribute to creating an opportunity in the market, giving property developers an additional way to bring value to Generation Rent. Allowing long-term residents to short-let in a compliant manner their units helps them earn a return of up to 40% of the rent they are paying. Moreover, it meets the needs of residents for a more flexible service in a world gripped by the rise of a sharing economy.