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Serviced Apartments : About to be legislated out of business ?

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I’m sure you’ve seen the explosion serviced apartments recently. There’s lots of training showing you how to make more money out of your buy to let property, or how to rent someone elses property and then sub-let it as a form of a short term let.

The training is very professional (Most of it!) and people are getting results, so that’s excellent.

It’s a great first step in the property market and you can maximise returns.

There could be a problem looming however, and the problem is one of legislation.

London has now introduced a policy that LIMITS the use of a full property for use as a serviced apartment.

This is because they feel that the increase in serviced apartment usage has meant that locals are being priced out of the rentals market as so many units are being used for serviced apartments, rather than for normal rental stock.

As ever with any government legislation that regards property, the proverbial elephant in the room is not being address. That elephant of course is the sheer fact that not enough properties are being built not only in London, but in the UK in general.

There’s a massive lack of housebuilding going on and there has been for at least the last 15 years.This issue of lack of new housing was going to bite at some point, and it seems that in 2016, both rental and sales prices have become so high that the government decides to legislate.

So what does it do?

Does it find a way to increase the number of properties on the market significantly like it needs to, thus allowing the air out of the high prices ?

No. Of course it doesn’t. Because that would be too obvious. Instead it’s trying to legislate and bring more homes on the market by stopping other people using them as a business.

So whilst I think serviced apartments are a great way to get yourself started in the housing market, especially by using the rent to rent model, I think that any business that is open to legislation only has a certain amount of shelf life.

The writing is on the wall for serviced apartments. It’s going to happen outside of London too.

1915319You can see it coming, and it’s just a matter of time.

So what do you do next then ?

Well, you need to look at the stock you have and if you’re renting properties through an agent and the plug is suddenly pulled on the serviced accommodation market, you may need to hand in your notice if its not going to stack up.

Right now you need to think about how you get most of your business. If it’s through AirBnB then they will no doubt place a tally on your account and limit the number of nights you can rent to just 90 days.

If you generate business through other avenues, perhaps your own website or word of mouth, you can likely get away with it.

As ever with this type of legislation, I’m not sure how it will be ‘policed’.

Just how do the government know how many times you rent a city centre flat out exactly ?

So in this case, you will need to up your marketing game instead of relying on 3rd party websites to find the clients for you.

Back when I did serviced apartments (we did them 15 years ago), we pretty much owned the first page of Google for most of the search terms you could think of. This involved multiple domain names (AirBnB didn’t exist in those days, and all we had was black and white TV – ok that last bit wasn’t true)

So you need to up your marketing skills. Video, blogs, image uploads, social media, the whole lot is going to have to be used to improve this business and make it viable.

If you have any questions about how to market your serviced apartments, then drop me a line, I’m more than happy to help.

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