Are Birmingham Landlords Turning to Short-Term Lets?
Short-term letting has always been present in some form but has only really exploded in popularity over the last 10 years, underpinned by the support of management platforms such as Airbnb.
Now, we’re seeing more and more landlords pivot to short-stay apartment letting as opposed to traditional shorthold tenancies. Offering increased flexibility and, in some cases, much higher returns on investment, it’s not hard to see why – short-term letting is meeting the changing demands of the tourism sector.
This is particularly true in city-centres across the UK. With a mix of leisure attractions, bars and restaurants, city-centre locations can generate the consistent demand that short-term lets thrive on. For landlords in cities such as Birmingham, the potential of a hybrid model – mixing both short-term letting and standard longer tenancies – is proving to be an appealing prospect.
How are short-term lets in Birmingham performing?
As one of the most popular cities in the country – filled with the nightlife, venues and leisure attractions that keep short-term lets in demand – Birmingham has a broad market of potential tenants for landlords to consider.
Research on Airbnb suggests that a short-term let for two guests can range from anywhere between £75 to £200, taking into account 158 stays across the city-centre. The average price per night for a full week in September costs around £144, while a weekend stay in the same month would cost £200.
Taking into account that £144 a night for a full week can equal over £1000, it’s easy to see why a short-term let in Birmingham can be incredibly lucrative for landlords.
According to SevenLiving, the average length of stay for a confirmed reservation in 105 Broad Street, a development in Birmingham, between January and August was between 6 and 8 days, while the average occupancy rate in the year to June was above 80% – highlighting the level of demand for short stay apartments in Birmingham.
This once again pulls the argument between traditional long-term tenancies versus short-term letting into focus. The average rent for an apartment in Birmingham, according to Home.co.uk, is around £902 per month.
So, what’s best? It all depends on the level of input you want (or can offer) within your investment. Short-term letting requires much more hands-on management or a partnership with a relevant agent, while a traditional tenancy is a little easier to manage.
How have Birmingham short-term lets withstood COVID-19?
One of the ‘hidden’ benefits of short-term letting is that its connection to the property market has helped sustain it through several national lockdowns.
While Airbnb and other similar platforms definitely felt the impact of the global pandemic, the streamlined nature of the process, alongside the fact it’s supported by thousands of private landlords, allowed it to bounce back much more quickly than the hospitality sector.
In London alone, occupied short-term rentals in London grew from 43.1% in May 2020 to 64.1% in May 2021 – a 48.8% increase in just a year and a much higher performance than both hotel and serviced apartments.
The same research also highlighted that short-stay apartments saw the highest growth in revenue per available room – up 44% – while serviced apartments only grew by 25.2% and hotels dipped by 2.6%.
So should you be considering short-term lets?
While it always depends on your own personal circumstances, there’s an argument to be made for short-term lets if you’re looking to take advantage of city-centre demand with your investments.
Although they require more hands-on management, they offer plenty of flexibility and have the potential to deliver above-average returns if you can maintain consistent occupants.