30th April 2020
Recent (pre Covid) research by The Guardian (February, 2020) highlighted just how prevalent Airbnb listings are in Edinburgh. 29% of all properties in The Old Town of Edinburgh are listed as short term lets, making it the most concentrated area of AirBnb’s in the UK (followed by NW Skye with 25%).
What impact has The Great Lockdown had on Airbnb in Edinburgh?
Airbnb listings in Edinburgh have fallen 27% in the year to March (The Times, April 2020). As governments around the world are recommending only essential travel, Airbnb’s, which cater to business travellers and tourists alike, have taken a huge hit. All bookings for these short term lets have been cancelled, leaving landlords with short term properties with mortgages to pay and no income. The cancellation of the Edinburgh Festivals this summer, usually a time of peak prices, has been a final nail in the coffin for some landlords.
We have seen a glut of short-term properties transferring to traditional long term/ PRT contracts. Rightmove has noted a 105% rise in the new long-term rental listings in the centre of Edinburgh (FT, April 2020). This is the highest increase in the UK, with a 78% increase seen in Bath, and 45% increase in London. The Times (April 2020) also reports that many landlords faced with a huge decline in income have decided to sell their properties
How will this affect the Edinburgh rental market?
We expect the increased number of rental properties available to reduce rents in areas where short term lets were most prevalent (The Old Town/ New Town East and Gayfield). 1 and 2 bed apartments are most commonly used for short term lets so these apartments will see the most pressure on rents. Larger properties will see less pressure on rents. In areas with lower proportion of short term lets, there will be less pressure on rental prices. Similarly, more expensive luxury properties which were not suitable for short term lets are unlikely to be affected as much.
What about the sales market?
Due to the increased number of landlords selling there may be some pressure on price, however anecdotal evidence shows that there is still strong demand to purchase these ‘ex short term’ apartments. The Times (April, 2020) reports that of the 100 1 and 2 bedroom apartments that have been listed on the ESPC since March, many have found buyers at or above the home report valuation, through virtual viewings.
Is now the time to buy?
There are certainly opportunities to be had in this Lockdown. It may be possible to purchase short term lets and repurposing them as long term lets in East New Town and Gayfield, this area in particular will appeal to young professionals, and gross yields of 5% + may be possible.
With the Bank of England base rate at an all-time low of 0.1%, Mortgages have never been cheaper. There is still an appetite from lenders to fund purchases for investors up to 75% LTV.
GBP is particularly weak against a number of international currencies (especially USD), making it more affordable than ever to purchase investment property in the UK.
Please get in touch with us to see how we can help you secure your next investment property.