It sounds like the perfect solution for thousands of empty city flats. Whether
you are an owner or a developer who can't sell or find long-term tenants,
letting your property as a serviced apartment must be tempting.
But owner-occupiers in blocks with serviced apartments - furnished flats
designed for short-term stays - are not all happy. Kevin Jackson owns a
£118,000 one-bedroom apartment in the Albany, a Grade II* listed cotton
exchange in Liverpool, converted into 123 apartments. He says that
anti-social tenants are making his life a misery. Jackson, 32, a film and
television location manager, estimates that three quarters of the 60 units
that sold in the Albany before the development went into administration in
June 2007 are now serviced apartments. Although he and his partner,
Katherine Lake, 35, a nurse, moved in three years ago he still does not know
if he has any permanent immediate neighbours.
Downstairs from Jackson, six lads from Belfast are checking in. Aged between
20 and 30, they work for a sportswear retailer and have come to Liverpool on
a “team-building” weekend. “We've booked a penthouse. It's cheaper than a
hotel, and there's plenty of room for us all,” says one of the lads. “We'll
be doing the team-building thing tomorrow. Tonight we're going to get
drunk.”
Paula Whittaker, of L3, the “accommodation solution company” that runs a
penthouse and nine other properties in the Albany (other apartments are let
by individuals and other companies), explains that the penthouse costs £400
a night: at approximately £66 per person, this compares favourably with
hotels. Ms Whittaker emphasises that her company does not allow rowdy
guests.
“I don't want to look down on people on stag and hen parties, but they are the
worst,” Kevin Jackson says. “It's noise, mess, spilt beer on the corridors
and in the elevator, people running about in the middle of the night, and
rubbish falling from the balcony.” He says he has complained to
environmental health officers at Liverpool City Council and to the
administrators, but matters have not improved. “If you had asked me in
January if we would still be here in July, I would have said no. But with
the credit crunch and the market, we just don't think we could sell. So
we're just going to sit tight.”
In the North, especially, serviced apartments - let out for several months or
for a single night - seem to be the only growth area in property.
Liverpool-based Vermont Developments has put on hold a £40 million
residential scheme in Salford but has leased 66 of its new apartments at The
Quarter in Liverpool, close to the new Arena and Conference Centre, to the
hotel chain Ramada, which will run them as serviced apartments alongside a
173-bedroom hotel.
Although there is demand from long-term corporate tenants in commercial
centres, the increase has been especially noticeable in cities that attract
short-stay tourists, such as Manchester, Newcastle, and Liverpool.
In London there are restrictions on the number of apartments in a borough that
can be let out for less than 90 days, to protect long-term residents and
prevent serviced ghettoes. In Liverpool, with thousands of empty flats, it
seems that developers, investors and absentee owners are grateful to get
anyone in. There is a lack of data about Liverpool's empty property: the
council says it is updating the figures. But in December 2006, out of 9,279
city-centre flats, 1,117 were empty, waiting for buyers or tenants. It is
safe to assume that this figure has since risen.
“The city council has no plans to curb the number of serviced apartments in
Liverpool,” a council spokesman says. “The success of serviced apartments
depends on their management. We are aware that if it fails it can become an
issue.”
The problem is that the business is unregulated. The best apartments are
registered with Visit Britain and the Association of Serviced Apartment
Providers. There are companies such as L3 that arrange keys and check guest
references. However, there is nothing to stop an individual owner offering
his or her property as a serviced apartment via an online booking service.
An owner is required to obtain a licence to allow rentals of less than 90
days, but according to Rebecca Davies-Jones, an assistant solicitor at Hill
Dickinson in Liverpool, “it is strongly suspected that a large proportion of
individuals [as opposed to commercial landlords] do not obtain this licence.”
With so many property firms in trouble, no one is checking up. There are
stories of owners failing to arrive with keys, and concierges being bribed
to find rooms for parties. Serviced apartments are expected to have clean
linen, home entertainment, cooking and washing facilities, but there are no
enforceable standards. Unlike in hotels, rules on health and safety,
insurance and public liability are hazy. In the Albany, for example, the
fire extinguishers have been removed from the corridors. Ms Whittaker says
that the management company appointed by the administrators is replacing
them.
Mark Thompson owns BASE Serviced Apartments, which oversees up to 40 serviced
apartments across Liverpool. He bans “party stays”, is stringent about
obtaining credit card checks from tenants and demands two forms of
identification before handing over keys. He also has strict rules about what
kind of property he will take on, either to rent out on behalf of the owner
or as his investment. He believes that, eventually, the “cowboys” who
neglect properties and guests will be forced out.
“It's got to be in the middle of things,” Thompson says. “Not on top of a
noisy bar, but as near to one as possible. People want to be within walking
distance of everything. So, no, the serviced apartments boom won't be the
saviour for all those apartments built in the middle of nowhere.” Thompson
agrees a rent with an owner at the start of a management period of at least
six months; nightly stays start at £80 per property.
It is telling that Chris Nisbet, the developer of the Albany, is looking at
schemes with an element of purpose-built serviced apartments. “The only way
to make serviced apartments work is with a block dedicated to serviced
apartments, or as part of an hotel offering,” he says. “The rest will fall
by the wayside.” Kevin Jackson, for one, must be hoping that this is true.
Fast facts
There are 6,000 serviced apartments in the UK registered with the Association
of Serviced Apartment Providers (ASAP).
London has the highest number of registered serviced apartments in the UK,
with 1,750.
To rent a serviced apartment in London costs from about £6OO a week to more
than £1,500. In Liverpool it costs from £560.
The return on these flats depends on whether the operator owns them or uses a
management firm, and on their grade and location.
Source: ASAP
