Liverpool and Manchester are both recognised as great destinations for property investors. Property is (still) very affordable and both cities have extensive populations of young adults (students and young professionals), hence there is always a strong demand not only for purpose-built student accommodation but also for high-quality, long-term residential rentals.
What is less widely recognised, however, is that both Liverpool and Manchester also have strong demand for short-term rental accommodation.
This demand comes not only from tourists, but also from EFL students and business people. In fact, there is now a cluster of short-term lettings hotspots in Liverpool and Manchester which can generate excellent returns for property investors who are prepared to move outside the standard “young-adult” property niche.
Any property investor familiar with Liverpool will probably know that Fairfield is a popular destination for student renters.
They may even know that long-term rental yields in this area are currently in the region of 13.6%. What they may not know is that yields for short-term rentals in this area are currently in the region of 27.2% and that’s assuming 50% occupancy to allow for seasonal fluctuations.
While Fairfield offers the richest pickings, there are other parts of Liverpool which offer short-term rental yields of over 20%. These include Walton (25.5%), Kensington (24.2%), Kirkdale (23.9%), Anfield (22.7%) and Toxteth (20.9%).
While property prices in Manchester are still very affordable (especially compared with London), there is no denying that they have gone up over recent years and this has placed downward pressure on yields.
Having said that, Manchester’s two, best short-term rental areas still offer double-digit yields, with Hulme at 15.1% and Levenshulme at 13.6%, again assuming 50% occupancy.
There are two good reasons why property investors can feel confident about moving into the short-term rental market in either Liverpool or Manchester.
The first is that both cities are benefitting from regeneration projects which can reasonably be expected to increase demand for short-term rental accommodation.
Liverpool has committed to a £14bn regeneration plan to improve the city and its infrastructure and to improve its standing as the host destination of choice for major events, including many sporting events.
Manchester has committed to a £1bn expansion of its airport, which, literally by definition, is intended to bring more people directly into the city, eliminating the need to transfer from London (and for those who do need to travel up from London, HS2 is on the way).
The second reason is that all the areas listed are places in which there is high demand for long-term residential accommodation both to rent and to buy.
Therefore even if investors felt that their property was under-performing as a short-term rental, or just wanted to change to a less intense form of property investment, it is very likely that they would be able to make a seamless transition to long-term rentals.
They can also reasonably expect to be able to make a quick, easy (and potentially profitable) withdrawal from the market at a later date if they felt it appropriate, for example to rebalance their overall investment portfolio.
Mark Burns is the managing director of Agent Indlu.