Short-Term Lets in Liverpool: Is It Right for Buy-to-Let Investors?

• Higher Rental Fees

Landlords can make the most of the rising prices in the rental market through the ability to increase rental fees regularly. This means you can collect higher rent payments from tenants to match the rental market as a whole.

• More Flexibility

If you are having issues with a tenant, it is easier to move on from them with a short-term let. This means you are less likely to be stuck with troublesome tenants, as you do not need to wait as long for their contract to run out.

• Easier for Convenience

Tenants needing somewhere to live fast are more likely to sign a short-term lease than a long-term one. In addition, a tenant on a short-term lease may ask to make it a long-term one. They are less likely to negotiate heavily, unlike with long-term contracts.

• Lower Exit Costs For Tenants

Unlike a long-term let, tenants do not have to wait a long time to move on from a tenancy if they choose to. This means they will not still be paying for the property if they move out for whatever reason.

As a buy-to-let investor, it’s important to know which mortgage you’ll need to rent out a property on a short-term basis. Some people assume they need a specific type of buy-to-let mortgage. In the majority of cases, most lenders provide standard buy-to-let mortgages.

However, lenders will insist you meet their buy-to-let requirements. Typically, lenders will place restrictions on how long you rent out the property throughout the year. However, some lenders are more flexible than others. Shop around for the best mortgage to suit your investment strategy.

You can also apply for a holiday let mortgage. Many lenders consider this a better option than a buy-to-let mortgage. These are less common than standard buy-to-lets, and lenders will have their own regulations and quirks, so make sure you consult a mortgage advisor beforehand.

However, if you plan on renting out serviced accommodation, you will need a specialist mortgage. Serviced accommodation mortgages or commercial mortgages are two options for this type of property.

Serviced accommodation loans are more difficult to find and allow landlords to rent our properties on a short-term basis.

Serviced accommodations are considered a trading business. As such, you’ll need a commercial mortgage to purchase this type of property. Luckily, these properties are purpose-built and require C1 planning, which removes any cap on the number of days they can be rented out. As such, your potential ROI is considerably higher than other short-term rental properties.

Alternatively, you can buy your short-term rental property with cash. This forgoes any potential mortgage headaches and makes the entire sale process more streamlined.

Long-term lettings are generally agreements between tenants and landlords that will cover a period longer than six months. They are ideal for those looking to stay in an area for a long time.

Long-term leases offer more stability for both the landlord and renter. The landlord receives a consistent cash flow of rental income, and the tenant avoids fluctuating rental prices and the awkwardness of having to move locations often.

However, landlords cannot make the most of changes in rental prices, and if long-term tenants cause problems, then it can cause issues in solving them.

There can also be more work for landlords due to additional legal requirements they have to meet throughout the tenancy. Property management companies can help manage this for you, but this does come with a fee.

Renters may find somewhere else that suits their needs, but being stuck in a long-term lease means they have to remain at their current location.

Long-term rental properties are often highly sought after by renters as they offer stability and allow both renters and landlords the ability to make long-term financial plans.

• More complex negotiations

As renters will be living at the property for a longer period, there are likely to be deeper negotiations involved when setting up the rental agreement.

• Fixed-term contracts

This is a weakness for both landlords and renters. With the average tenancy agreement lasting around a year, this means the rental price is capped. If the rental market sees a rise, then landlords are not able to see the benefits of this until the tenancy agreement ends.

• More legal obligations

Tenants in long-term lettings will see the property as a home rather than just a place to sleep. Part of being a landlord is ensuring your tenants have a safe service, and so there are additional legal obligations that you will need to deal with.

Liverpool is a city that attracts tourists. Thanks to the Beatles, Liverpool and Everton Football Clubs, more museums than any other place in the UK outside London, stunning architecture and no fewer than seven universities, the city is a fantastic option for your short-term rent strategy.

The North West is predicted to experience 11.70% capital growth by 2027. This will provide more opportunities to attract visitors to Liverpool and the surrounding areas.

The city welcomed 71.7 million visitors in 2022, which was 40% more than the previous years. In addition, landlords do not have to worry about rental restrictions in the city – London investors can only short-let apartments for 90 days. Read more about some of the latest property investments in London with our guide.

The average occupancy rate for the city is 48%. The UK average is 52%.

Airbnb puts the average daily rate for short lets at £145 in the area. So, if you were buying property for Airbnb purposes and renting it out at the average price and occupancy rate, you would earn £25,520 per year. This would cover your mortgage, pay your overheads and provide a nice profit as well.