Adaptability is the key to improving your portfolio’s performance amidst the ever-evolving rental market landscape. It allows landlords to maximise rental income despite shifting regulations like the Renter’s Reform Bill, rising interest rates, economic fluctuations and changing tenant preferences.
Currently, the greatest shift in the rental landscape is caused by the notable changes in people’s lifestyles. In a post-pandemic world, we’ve seen how new ways of working and travelling have affected the way people seek flexibility in their lives. Remote work, short-term assignments, extended vacations, work-life balance - all these are pushing tenants to seek flexibility in their dwelling options.
As a landlord, you need to be aware of these changes so you can adjust your letting strategies and increase your property’s rental income potential.
In this article, you’ll discover why flexible living is the future of the rental market and how you can position your portfolio to benefit from these changes.
The Evolving Needs of the Gig Economy and Remote Workers
One of the key drivers of flexible living is the gig economy and remote workers. The pandemic made freelance and remote work appealing to those who wanted to be free from the traditional 9-5 jobs.
For the past few years, companies implemented adaptable and flexible strategies to keep their workers productive and functioning despite the limitations caused by the pandemic. As we emerged from all these restrictions, it’s evident that people no longer want to return to the way things were.
Workers like the flexible lifestyle that remote work brings. They desired autonomy and location independence - something that brought them closer to their idea of a work-life balance. With technology acting as a catalyst for this transformation, it’s easier for freelancers and remote workers to thrive in this new set-up. The high-speed Internet, virtual office platforms and collaboration tools align with the needs of the gig economy.
But that’s not where that ends.
This opens an incredible opportunity for the rental market as well. With people turning their backs on the traditional office location, property owners and landlords can offer flexible living arrangements to the gig economy. This new era of housing caters to the nomadic lifestyle of freelancers and remote workers - while giving landlords better rental income options than the typical long-term and Assured Shorthold Tenancies (AST).
What is Flexible Living?
Flexible living is the adaptable approach to letting properties. Instead of the conventional long-term lease, landlords and property owners offer a range of letting options like short-term rentals, co-living, etc.
The idea is to offer a variety of living arrangements to suit the changing lifestyles of tenants. The focus is not on the property's location per se but more on how it can support the lifestyle preferences of the tenants. It has to align with their idea of modern living that includes a sense of community, convenience and flexibility.
Instead of being tied to rigid lease agreements, tenants can choose to stay for a few nights to several months. Whether you’re a property owner or a property management company, this will open doors that’ll attract travellers, digital nomads and business professionals.
But it’s not just the lifestyle preferences that make flexible living a better option.
Other Factors Giving Rise to Flexible Letting
The rising popularity of flexible letting provides a logical solution to some of the pressing challenges that landlords are facing today.
Take the Renter’s Reform Bill and the rising mortgage rates as an example. These two have made buy-to-let properties less appealing to property investors. The rigid regulations are putting a strain on their rental properties and it’s causing some landlords to give up and sell their units.
You don’t have to resort to that if you use flexible living as our letting strategy. Flexible letting allows you to maximise your earning potential to balance the risks that these restrictions are putting on landlords.
Who Benefits from Flexible Letting
This letting method is a viable option for property owners who are struggling with the following issues:
- Underperforming portfolios. Use flexible living to make properties more attractive to a new market: digital nomads, business travellers, young professionals and tourists. These people prefer short-term rents and can also benefit from co-living spaces to minimise rental fees.
- Leaseback on Build-to-Rent stock. Flexible living offers a risk-averse scheme to make BtR investments more appealing. Property owners and management companies can use flexible letting to do a leaseback deal with BtR operators.
- Vacant units. Instead of units staying vacant, property owners can do short-term rentals to fill vacancies and maximise yields while waiting for a sale or the next phase of their investment strategies. At the very least, this can help with the maintenance expenses of the property.
- New Housing units. Property developers who are stuck with unsold new units (due to high mortgage rates) can use flexible letting as a strategy to earn from the void units. This can be a viable exit strategy for home builders - at least, until the seller’s market comes around.
Flexible Letting Strategies
With all these changes in the rental market, it’s not surprising to say that flexible living is poised to be the new norm. As a property owner, adapting to the changing landscape and dynamic needs of modern tenants will lead to higher occupancy rates and premium rental opportunities.
There are several flexible letting strategies to choose from. Here are the two prominent options that you have.
- Short-Term Rentals. These cater to travellers and business professionals looking for temporary accommodations. It can range from a few days to a couple of months. This option demands a higher rental rate - which will lead to maximum earnings for property owners. However, it’s constrained by the 90-day limit on short-term rentals. By using data-driven marketing strategies, landlords can work around these restrictions by opening properties for short-term letting during the peak season before transitioning to mid-term rentals for the rest of the year.
- Co-living Spaces. These offer private living quarters with shared amenities and resources. The appeal of this flexible living arrangement is the sense of community and lower cost of living expenses. It’s a trend that aligns with the changing tenant lifestyle while solving issues with inflation. This strategy gives landlords better occupancy rates and yields.
The Perceived Challenges of Flexible Living and How Technology And Great Partnerships Solve Them
The higher rental yields and occupancy rates make flexible living an ideal letting strategy. But you can enjoy better results as long as you understand the perceived challenges surrounding flexible letting.
For one, there’s a 90-day restriction to short-term rentals, at least, there is in London. That means you’re only allowed to short-let your property for a maximum of 90 days per year.
Not only that, there’s a high tenant turnover in short-term letting. To maximise occupancy rates, you’ll have to continuously market the property to get the next tenant or guest to occupy. Once you get the tenant, you’ll have to help them move in (or check in guests), clean the property between stays, maintain and repair damages to the property, etc.
If it feels like a lot of work that’s incredibly time-consuming - don’t worry. There’s a better way to earn more from a flexible living strategy without stressing yourself out with all the tasks involved.
You need to find a letting property expert equipped with a smart property platform.
The property management specialist can share their expertise in using data-driven strategies to work around the 90-day restriction. You can maximise occupancy rates by being flexible in the type of letting methods that you can use.
Your partnership with the property specialist can also give you access to their smart technology that can automate tasks within the flexible rental model - like booking calendars and tenant interactions.
They can also help with the operations that will keep your guests and tenants happy. As a result, you’ll get more 5-star reviews. This can boost your property’s reputation and earning potential.
It’s an easy, profitable and viable solution that can help you get the most out of a flexible living strategy.
Meeting the Demand for Flexible Living
Given all the changes in the rental market and tenant preferences, it’s not farfetched to think that flexible living is the future.
It gives property owners and property management companies a better way to meet the evolving needs of society. It’s also the perfect solution to maximise rental yields despite the economic fluctuations and changing regulations in the letting market.
While there are still challenges that affect the growth of flexible living, technology and key partnerships can counter these issues and protect the portfolio growth of landlords.
If you combine technology with property expertise, data-driven marketing strategies and service excellence, you have a golden opportunity to thrive in today’s rental market. Make sure you position yourself for success as the demand for flexible living continues to grow.
Make Flexible Living Your Next Strategy
A flexible living strategy effectively increases the earning potential of your portfolio - but it can get better. You can enjoy the rental income of your portfolio without the typical stress that comes with being a landlord.
How? By partnering with a company that can handle the frequent turnover of tenants and evolving rental market requirements. They can carry out tasks like checking in and out of guests and providing the day-to-day housekeeping and maintenance operations for the upkeep of your property.
Opago offers flexible living property management services for landlords. We’ve combined technology and property expertise to provide exception service. Our streamlined processes are supported by our state-of-the-art property management platform that can easily integrate with existing management systems.
If you’re ready to take the first step to flexible letting, let’s discuss the potential of your property. Contact us and let’s start this journey together.
