Short-term letting

With a diverse range of premium and affordable offerings, holiday rental accommodation sites are proving particularly attractive in the Liverpool City Region. Your Move explores what kind of properties are available, the factors influencing demand and why investors are increasingly looking at the area as a destination for their next venture.

By Matthew Smith 

Nationally, holiday rental accommodation sites such as Airbnb, HomeAway and Holiday Lettings have made substantial progress as they are becoming increasingly synonymous with travel. These sites have two principal aims; firstly to provide travellers with an alternative form of accommodation and, secondly, to generate bookings for property owners. Such enhancements in travel accommodation have enabled global exposure for property owners and have essentially allowed them to become ‘micro-entrepreneurs’ as part of a growing network around the world.

What is available?

The Liverpool City Region offers an eclectic mix of properties which are advertised on holiday rental accommodation sites. From conventional properties like houses and apartments to more unconventional homes away from home including canal boats located in Albert Dock, the region’s offerings is diverse. According to Airbnb’s data, the average price per night for properties in Liverpool city centre is £113, rising to £123 around the prominent waterfront destinations of Albert Dock and Strand Street. Outside of Liverpool itself, Sefton’s average rents per night fall to £51 and in Knowsley and Wirral, owners can expect to generate an average of £55, with a slightly higher average of £57 in St Helens. In terms of affordability Liverpool city centre has both premium offerings and cheaper alternatives, ranging from the three-bed duplex apartments on Sir Thomas Street (£595) and Albert Dock (£575) at the higher end, to the single and double rooms providing a cheaper alternative, with city centre double room apartments priced as low as £30. “The bliss point seems to be one or two-bed apartments, which is a happy medium,” says Matt Coughlan, founder of Liverpool and Manchester based Airbnb property management firm Smooth Rentals.

Driving demand

Demand for holiday rental accommodation is primarily driven by location, tourism, rents commanded and the convenience of shopping facilities. The figures for the Liverpool City Region in each of its boroughs demonstrate that rents are highest around Liverpool city centre and the tourism hub of Albert Dock. However, other up-and-coming areas are proving particularly promising. “There is strong demand in areas like Smithdown Road and London Road near to the theatres, universities and hospitals,” says Matt who believes these areas have potential. Additionally, with TripAdvisor naming Liverpool the third best UK Tourist Destination in 2016, “tourism in Liverpool is going from strength to strength and this is reflected in the region’s growth on Airbnb,” according to Joe Davies, co-founder of Host-So-Simple, a Liverpool-based property management firm. Consumer preferences have also contributed to the relative success of holiday rental accommodation sites in the region. “Those wanting a cheap city break who are booking last minute or booking in advance and looking for a good deal are behind why Airbnb, for example, has been performing well in the city region,” adds Matt.

Investment potential

Listing properties on holiday rental sites is proving to be particularly attractive as it could allow owners to earn double what they would have earned by letting their property to more traditional long-term tenants. Opportunities also exist for owners to triple and even quadruple their rental income during summer. “A one-bed studio apartment in Liverpool, where guests have the entire property to themselves, may generate £70 to £100 per night,” says Matt. “For a two-bed apartment you may be paying £80 to £120 per night in Liverpool city centre. I would expect a minimum of £1,300 to be generated at Airbnb properties per month and a minimum of £15,600 per year. “Two-bed apartments have the potential to generate upwards of £16,000 per year, based on a rent of £70 per night and a 20-night stay. “The average occupancy over the course of the year is 60%, based on these figures.” The returns to investors have coincided with changes in public policy. The Rent a Room relief, which was phased in on 6 April 2016, has allowed property owners to generate a tax-free income of earnings up to £7,500. Such incentives have attracted international investors who are looking to Liverpool. “I get a lot of calls from investors, specifically from the United Arab Emirates, Greece and France who are interested in purchasing property in the city with the sole purpose of listing it on a holiday rental accommodation site,” says Matt. As savvy local and international buyers have poured their money into Liverpool City Region property, Matt has been pleasantly surprised with the growth of Airbnb in the area and what this means for his business. “When I first set up the business I thought it would just be for people listing properties in the city but it’s interesting that people are going down this route,” he says.

Benefitting the city region

In addition to the returns for private property owners, the presence of holiday rental homes in the Liverpool City Region is bringing external benefits to nearby shops, restaurants and local attractions. Businesses can exploit the strong demand from guests as they look to make their visit more authentic. “A recent study found Airbnb guests, for example, spend up to two times more and stay for twice as long compared to hotel use,” says Joe, who emphasises the importance of this for local firms.

Growth and the future

It’s clear there is still room for more holiday rental accommodation in the Liverpool City Region. Liverpool remains far behind other prominent cities in the UK on holiday rental accommodation sites. Having between 250 and 300 listings on Airbnb and just over 100 on HomeAway, Liverpool City Region’s presence in the sector has spare capacity and currently only represents 1% of the London market equivalent. “The city centre still has lots of potential as the market is not yet saturated,” says Joe. However, once market saturation occurs, the excess supply of holiday rental accommodation will stall any further gains for property owners due to competitive pressures. “We will begin to see outer town suburbs around Lark Lane and Smithdown Road start to gain popularity as a more budget option,” he adds.

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