RSS Feed

Related Articles

Related Categories

Second home investments in London are on the rise

28th June 2016 Print
London

According to Pastor Real Estate, residential property prices in London are set to rise 27 per cent by 2018.

Given that the average property price in the capital was reported as being £643,117 earlier this month, many would-be buyers find themselves priced out of this highly desirable market. However, could the answers be found in Airbnb? The property portal, founded in 2008, enables people with spare rooms or temporarily vacant properties to let out their space on a short-term basis. Since it’s inception, Airbnb has grown to the point where it’s now valued at a staggering $25 billion, active in over 34,000 cities across 191 countries. For investors or homeowners with current space to let, there is the immediate potential to start generating income. This can cover mortgage payments, or even be used to invest in a second home specifically to let on Airbnb - which could earn hosts a substantial sum indeed. 

Airbnb in London – a beginner’s overview 

With mortgage rates hovering at historic lows and prices only set to rise, now is certainly the time to buy an investment property in London. Airbnb can provide an easy way to find the capital for this investment, as the simple business model means you can begin letting out your unused space straight away. 

The concept has boomed worldwide since the company was launched in San Francisco, and if you’re wondering why this relatively simple concept didn’t catch on sooner, there was good reason. Many cities had laws in place to prevent or restrict the short-term letting market, and in the wake of the Airbnb revolution, many have had to revisit these lest they miss out on considerable economic growth that occurs as a result of tourism and visitor spending (studies have shown that 41 per cent of visitor spending takes place in the host neighborhood). For example, in London, homeowners required planning permission in order to let out a property for a period of 90 days or less, and this was the case for over 40 years. Failing to obtain such permission was punishable with a fine of £20,000 pounds, but since Airbnb was legalized in 2015, things have changed significantly. As soon as it was legal, over 13,000 listings in cropped up in London, with more than 6,600 of these for full properties.  

While the rules have been relaxed and Airbnb is of course now legal, laws are subject to change and no doubt will be revised as the popularity of this letting model grows. Therefore hosts should always stay on top of the legislation regarding short-term lets, and if buying anywhere other than London, should research the specific bylaws regarding that city (in some cities, short-term lets are still prohibited). 

Apartment

How much could you earn? 

The contribution of the Airbnb community to the economy is palpable, having supported 11,600 jobs last year UK-wide whilst generating $824 million in economic activity.

For those already considering a second property in London, or are thinking about using Airbnb to generate the capital to purchase one, there is certainly huge potential for revenue when looking at the figures. The average UK Airbnb host can earn more than £2,800 by letting their property for just 33 days, but for those wanting to see a London-specific figure, the site has an Airbnb host tool that enables hosts to see what the average rent is for a property in their area. According to the tool, the average rent for a week in London is £532 per week, a figure that rises to £585 per week in luxury markets such as Mayfair. 

Having risen to become one of the most popular accommodation sites globally, Airbnb has the potential to provide lucrative returns for hosts throughout London. 

More Photos - Click to Enlarge

London Apartment