The birth of the ‘sharing economy’ in Buy-To-Let has led to new ways for residential landlords to maximise their return on investment. The ongoing rise of the internet has led to numerous platforms for people to advertise their spare room to visitors coming to Edinburgh. It has blurred the lines between hotel stays and staying in someone’s home. It has opened up an opportunity for residential landlords to continue to earn from their assets in void periods.
If you are a landlord with a property, typically left void for any period of time each year – as is often the case with larger HMO properties, most often occupied by students – then this could be the perfect solution to ensure you maximise your return on investment and don’t leave an empty property costing money, when it could be earning its keep.
And where better to make the most of these opportunities than Scotland’s tourist capital, Edinburgh. In 2015 Edinburgh attracted 3.85 million visitors, generating £1.32 billion for the local economy, and it was the 2nd most visited UK destination for international visitors after London. The pull of history, architecture, world-class visitor attractions as well as social and cultural events means Edinburgh will continue to draw large volumes of visitors all year round.
If you have a Buy-To-Let available property and this sounds like an exciting opportunity you would be forgiven for jumping straight online to advertise. Before you do, you would be wise to make sure you are fully prepared to take advantage of the opportunities, but also mitigate against the risks.
Our Short Term Lets Executive, Danielle Hunter, takes us through the key things you need to know before you get started.
Popular Areas
Holiday makers will be viewing your property online from afar, and are unlikely to have a great knowledge of the local geography and amenities. The first two things that will draw someone to the property will be its position on the map and the price.
The best performing areas are walking distance to the City Centre and main attractions, such as the New Town and Old Town. Otherwise, you need to clearly highlight in the property description how easy it is to get about town from your property. A particular attraction for Edinburgh guests is the option to stay in traditional Georgian homes and this may pull people further from the City Centre to areas such as Viewforth, Bruntsfield or Dalry.
Growing a reputation
The key aspect of the ‘sharing economy’ is feedback. The best way to attract good quality future guests is to be a great host to your current guests. Tinkering with the price will be essential, especially in the early days, as unlike the long-term rental market, prices can fluctuate more fluidly through the seasons. Once you have a stream of guests booked in however, you need to make sure they have a comfortable and enjoyable stay. The more 5* reviews you can garner means your property will be more appealing to potential future guests and help guarantee a continual flow of bookings.
Facilities
The second biggest impact to pricing will come from the facilities on offer at your property. To reach anywhere near the maximum rates, it is essential to provide Wi-Fi and television facilities for your holiday let guests, not to mention clean linen and towels. Travellers are looking for somewhere between a home and a hotel, with the benefits that each has to offer. Thoughtful courtesies such as toiletries or tea and coffee will make your guests feel welcome and looked after. This might seem like a tall order but getting things set up right from the start will ensure things run smoothly from the off and bring those essential 5* reviews in.
You should also make sure that all your appliances and facilities are in good working order. The last thing you need is a guest calling to say the shower has stopped working. Repairs will need to be attended to immediately if you want to keep your guests comfortable so try to minimise the chance of this happening in the first place by carrying out regular checks and ensuring appliances and heating facilities are in good working order. Having a maintenance team on hand to respond when a problem does occur is also extremely beneficial in keeping things running smoothly.
Running costs
For a short term let, you as the landlord will be responsible for paying the utilities, broadband, council tax, cleaning fees and any fees associated with managing the Buy-To-Let property. As well as furniture, you will need to provide bedding, linen, towels, and toilet roll. You will also be responsible for the cleaning of the property and all the linen and towels between stays. There could be several change-overs in a short space of time, so these costs are not limited to once a month.
It is also important the property is well furnished. It helps the appeal of a property if it appears to be well matched and attractive rather than just functional. Your guests are paying for an experience as well as an amenity.
It is also worth considering that overall wear and tear in a short-term flat is generally less than a flat rented out on a longer-term lease. Most properties will be used by guests as a base for exploring the City so will be occupied for a minimum of time. This can mean that larger costs associated with a long-term rental property are reduced.
Compliance
Just as with a long-term rental your property will need to have an annual Gas Safety Certificate, interlinked mains wired smoke alarms and a Carbon Monoxide alarm fitted. As you are responsible for the Health and Safety of your guests it is also best practice to ensure an Electrical Installation Condition Report and Portable Appliance Test are also conducted with certification issued.
So, what’s the catch?
If you’re familiar with the residential let industry then you will be used to fairly predictable rental forecasts. With holiday lets it is more difficult to forecast income as you adjust the pricing to suit the season and competition and even with a booking secured, you cannot guarantee it won’t fall through at the last minute
You also need to make sure you have plans in place to deal with guest requests – whatever the time of day or night. A great holiday let host will be responsive to their guest needs and able to get any hiccups dealt with swiftly. This will all add to your reputation online and help secure future bookings.
Agency vs. DIY
To get the most out of your holiday let it pays to employ the expertise, knowledge and round the clock care a good agent can offer you. At Braemore, we are constantly reviewing the market to ensure our portfolio of Short Term Lets are priced appropriately. Expert knowledge and experience can maximise the benefits and minimise the risk.
If you are ready to speak to us about your holiday let, call Danielle today on 0131 560 1405 and find out how Braemore can help get the sharing economy working for you.
To enquire about Braemore and our services, get in touch with us, here.