Airbnb Growth in London
Whenever I mention Airbnb to property specialists I get varying reactions, from shock horror to intrigue. There still appears to be a chasm between the traditional landlord and the Airbnb landlord.
I fully understand the two are different beasts, the proposals are very different. It is akin to the estate agent that concentrates on sales but does some letting, the two side both involve property but are very, very different in nature. Standard AST letting and Airbnb are just as different.
Where I see things changing is with the growth of HMOs. Landlords are keen to look at ways to maximise income in a time of flat rentals and in many ways the HMO is a bridge between your AST and your Airbnb.
The interesting thing for me, as a property lending specialist, is how the levels of income differ and the trends that exist within them.
London Airbnb Market
Take this as an example;
The graph shows the growth in volume of Airbnb rentals within London. OK, this can’t go on forever but there is a genuine growth since 2015 which probably has scope to move further upwards.
As of 1st June 2017 Airdna report 50,418 properties in London listed on Airbnb.
If we rewind to 2012 then you will remember the glut of properties being let out by locals for the Olympic games. The same thing happens every year around Wimbledon, we have a precedent that Londoners get what Airbnb offers.
I am not selling Airbnb, it is not what I do. What interests me is that I work with many landlords and arrange their finance for them. There is scope to increase the yield of each property by moving how it is rented. Mortgage companies remain some way behind the trend, however we can source finance for short term lets, holiday lets and Airbnb. My point is that the sector is growing and many landlords are not looking at the opportunity.
It is not for everyone, but whether it fits you or not, it always helps to understand what is going on and what other people may be doing.
London Property Income & Yield
These figures are income only. I accept the increased cost in managing Airbnb (or any short term let) but looking at the income levels then it certainly gets the attention.
Airdna provide the following income figures for London properties;
Have a look at these figures. They are reported in USD so even if we divide by 1.3 we can see the daily rate on a 4 bedroom property is circa £290, or £8,700 if let for the full month. A 1 bedroom property is attracting £130 per night, that’s £2600 if let for 20 days or £3,900 for a full month.
Seasonality has a role to play, even with this then the figures are certainly worth taking a closer look at.
I am no lettings expert, I am merely showing that the property rental market could well change as the habits and demands of tenants changes also.
For the landlord looking at Airbnb then mortgaging for this purpose is not straightforward, I can help and understanding how the figures work goes a long way to getting these mortgages approved.
Any questions then let me know, otherwise let’s see where the London property market goes next.
By Dave Farmer