Londoners in their thousands are turning to Airbnb as a way to generate extra income. And despite the 90 day limit, even seasoned landlords are coming round to the fact that a combination of Airbnb and traditional tenancy will maximise their return on investment.
So exactly how much money can you make from Airbnb?
We’ve done some research and estimated the average potential Airbnb day rate for a two bedroom property in each London borough. We've also shown the number of active hosts in each borough, to show you where the Airbnb hotspots are.
I’m a landlord, I have a vacant property, or I have a spare room - how should I use Airbnb?
If you’re a landlord who favours traditional long-let tenancies, it’s still wise to use Airbnb to maximise potential revenue. For example, if your property becomes vacant in the quieter months, we recommend listing your property on Airbnb and synchronising your tenancy to start a long-term let in the summer or late summer when demand from tenants and therefore prices are highest.
Discover the Airbnb value of your property in 60 seconds by clicking on our tool to the right!
Tenant demand surges by around 60% in September, while available rental stock declines. This means that we typically see nearly double the number of enquiries per property compared with an average month and four times the level of interest per property compared with December. This increased demand pushes up rental prices considerably, and also reduces dreaded void periods. In other words, this is when you want to let your property!
It’s worth noting that only ‘entire home’ listings that are subject to 90 day rule - so there is nothing to stop you renting out one room for 12 months, or even four out of five rooms. The rents you can achieve during weekend stays or overnight stays can easily match or beat what you could achieve for a monthly rental income from a normal tenancy - plus you can enjoy the flexibility of choosing when you want to rent it out and when you don’t.
Is your property currently on the market to let or sell?
If your property is already on the market, why not earn on Airbnb until you let or sell it? Every day it’s sitting vacant is potentially losing you money, so it really does pay to get on board with Airbnb in short-term.
How much can you earn through Airbnb - and which boroughs are already cashing in?
*Portico data January 2017 (based on two bedroom properties and a 70% occupancy rate).
According to our research, the average two bedroom property in London achieves £106 a night (excluding the cleaning fee). This would produce a healthy average monthly income of £2,226 on a 70% occupancy rate, which is the minimum we expect to achieve at Portico Host. When we compare this to the average monthly rent for a two bedroom property in London on a long-term let (£1,777), there’s a huge £449 a month difference.
And as you can see from the colour coding, a huge number of London households are realising the earning potential of short-term rentals. Westminster is the borough with the highest number of active listings at 5,631 and the highest average daily rate at £224, closely followed by centrally located Tower Hamlets with 5,076 listings, and trendy Hackney with 3,572 active listings.
Interestingly, Hammersmith & Fulham and City of London both achieve strong potential average Airbnb day rates, £128 and £181, but less people are taking advantage of these high prices. In fact, there are only 2,506 active Airbnb listings in the whole Hammersmith & Fulham borough - so hosts here are likely to achieve high occupancy rates and therefore a high monthly income as there’s less competition.
Locations & landmarks
Though central London boroughs account for the majority of Airbnb property listings, that isn’t to say that you have to have a property in Zone 1 or 2 to be a successful Airbnb host.
There’s a huge market for families looking for short-term housing solutions while they’re searching for a home to buy or rent, for people who are working temporarily in London and needing a flexible option, and for those visiting the capital for specific plans or events.
Brent (£99) and Newham (£95) are two boroughs that stand out for having a lot of active users and achieving high average Airbnb day rates, especially considering their Zone 3 locations. This can be put down to the fact that Brent’s most famous feature is the legendary Wembley Stadium, where people will travel from afar for a music concert or footie match and need a place to stay. Similarly, Newham is extremely popular with Airbnb guests who want to be close to the Excel Exhibition Centre.
Merton is also in high demand as it’s home to Wimbledon - so there’s a great opportunity here for landlords, second-home owners or those with spare rooms to cash in, especially as there are only 642 active listings in the area. The average Airbnb day rate for a two bedroom property sits at reasonable £95 a night in this leafy south-west patch, but prices will rise dramatically with seasonal demand.
Furthermore, when Crossrail starts running this year (and is fully operational in 2018), central London will be just a short train ride away from many of these outer boroughs, making them much more desirable to an Airbnb guest.
If you'd like to list your property on Airbnb, give us a call on 0207 099 4000 or visit www.portico.com/airbnb for more information.
The potential Airbnb day rates quoted here are indicative, not guaranteed and may be lower if the property has a low occupancy.