The short-term rental market is booming in Britain, with an estimated 67,312 active rental properties in the capital alone, available to visitors via sites like Airbnb. And interestingly, it’s not just those with a spare room who are cashing in...
Two years ago, the RLA published a report that suggested one in three landlords were moving towards short-term lets because of changes in mortgage interest relief, and now the tax changes are actually being phased in, that percentage may be even higher.
Of course, in London, landlords are restricted to renting out their homes for a maximum of 90 days over the year, making Airbnb a smart short-term solution for those who own property in the city. However, in Liverpool - the metropolitan city in North West England - landlords aren’t restricted by such limits, and so the market is reaching an all-time high.
Interested to find out more? Here we’ll look into why the market in Liverpool is booming, how much landlords stand to make on long-lets and short-lets, plus how to get started.
Why Liverpool is a great place to invest
If you’re at all familiar with Liverpool, you know that the city is thriving – and you’re probably aware that its future is bright.
According to the city council’s Liverpool Local Plan, Liverpool will continue to experience transformative growth over the next several years. At present, regeneration projects including Project Jennifer, Liverpool Waters, and the Knowledge Quarter are worth £14bn. This figure includes ongoing projects as well as those in the pipeline. Moreover, the city has plans to develop nearly 400 acres of land, create well over 30,000 new homes, and add nearly 40,000 new jobs in the coming months, which will inevitably bring more people and demand to the buzzing city. Growth should continue well into the future, making Liverpool rentals a source of reliable profit.
Interestingly, the official English Private Landlords Survey, which was released earlier this year, revealed that 11% of landlords are planning on investing further and expanding their rental portfolio in the next few years. Given Liverpool’s regeneration plans, and now its thriving Airbnb market, this city may be one to add to your shortlist.
Affordable property prices (£130,000 is the average property price)
The best news for property investors new and experienced alike: Liverpool offers low property prices!
The average Liverpool property price stands at around £130,000, in sharp contrast to the average UK home price of £217,000. Compared with London’s average home price of £480,000 and Oxford’s average price of £411,000, Liverpool property investments are affordable.
A rental market fuelled by a 70,000-strong student population
Better still, Liverpool’s many universities attract a massive population of students, all requiring accommodation. Thanks to vibrant new neighbourhoods including the Baltic Triangle, Liverpool One, and The Fabric District, many recent graduates opt to remain in Liverpool, too.
With an abundance of opportunities and an exciting culture, the city is home to a thriving population of young professionals as well. With more than 70,000 students enrolled per year, strong retention rates and business development on the rise, it’s easy to see why Liverpool is among the UK’s hottest rental markets.
Landlords can expect high average rental yields
Given the low property prices but high demand for rental property, Liverpool also offers landlords an extremely healthy rental yield.
London’s average rental yield is 3.05%, and Southampton’s is 3.55%. Both of these are close to the national average rental yield, which hovers around 3.6%.
In contrast, Liverpool’s average rental yield stands around 8.3% with some postcodes offering rental yields over 11%! Rental price growth in Liverpool averages approximately 2.65%, guaranteeing an excellent return on investment.
So, why are Landlords switching to Airbnb?
As a result of new tax and legislative changes squeezing profits, a large number of landlords are looking to Airbnb to yield a higher return. Let’s look at the latest statistics for the Liverpool Airbnb market:
Figures on table from AirDNA
77% increase in properties listed on Airbnb over the last year
As you can see from the table, Liverpool has seen a staggering 77% increase in entire homes available for rent on Airbnb over the last year. A huge increase. Clearly landlords and homeowners are cottoning on to the lucrativity of short term lets in Liverpool, with the average daily rate now standing at a healthy £145. This has slightly fallen from the average daily rate of £160 the year before, but this is most likely due to the fact the supply has almost doubled.
Landlords can achieve double their yield by using Airbnb!
But it’s not just high day rates that are attracting landlords to Airbnb. We recently did some data analysis into the short-let market and discovered that landlords with properties in Liverpool, have the potential to achieve yields of 15% or more at 50% occupancy!
To put this in context, long-term rentals in Liverpool typically achieve average yields of 8.3%.
Walton, Liverpool, yields one of the highest returns
Walton is located on the outskirts of Liverpool city centre, north of Anfield and east of Bootle and Orrell Park. Property prices are cheaper here than in other postcodes in the area, enabling landlords to achieve more impressive yields.
Of the top 10 best performing locations for short-term lets in Liverpool and Manchester, the top five locations are in Liverpool postcodes L4, L6 and L7. To give that some context, in Manchester, the highest Airbnb yields can be found in Beswick (M11) at 17%.
Rachel Dickman, regional manager, Portico Host, said: “It perhaps isn’t surprising to find that the properties that are achieving the greatest returns are those that are situated in areas surrounding Liverpool and Manchester city centres. These places typically have excellent transport links, proximity to popular tourist attractions, employment hubs, and good restaurants and cafes."
"Liverpool is becoming increasingly popular on the tourist trail, with 1.34 million people visiting the city in 2018, and with business travellers, students and young professionals. A growing number are wanting to stay in short term let properties, and the increased demand for this type of accommodation is underpinning the rents that can be achieved.”
Liverpool property prices set to increase
There is no time like the present to invest in Liverpool properties as the area’s low real property prices aren’t likely to last. By August of 2018, the UK Cities House Price Index showed that Liverpool’s prices were rising faster than those of any other recorded city, showing an increase of 7.5% over the course of a single year. In contrast, the average UK house price growth was less than half that at 3.6%.
Despite sluggish real estate price growth nationwide and questions about how Brexit will affect growth in the future, Liverpool remains one of the country’s best property markets with entry-level options as well as high-end investment opportunities. For the time being, lower property prices paired with exceptional rental income make Liverpool one of the UK’s best places to invest in buy-to-let properties.
Start earning on Airbnb today with Portico Host
With Liverpool’s property prices positioned to climb higher, it’s best to maximize profitability and strike while the iron is hot. Now is the perfect time to make an investment, whether you plan to take advantage of the Airbnb boom or choose a different strategy.
If you’re considering putting your property on Airbnb, find out how our Airbnb Management service, Portico Host, can help. We have branches in London, Liverpool and Manchester, and will take care of everything, from the set up to the guest communication.
Drop the Liverpool team an email at firstname.lastname@example.org or call us on 020 7099 4000!!
Plus take advantage of our £150 refer a friend offer to bag yourself some extra spending money! Click here for full details.