The past and the corporate tenant
Over the last two decades, the ‘corporate tenant’ was the holy grail for landlords within the private rented sector who were seeking minimal fuss and as close to a guaranteed rental income as possible. In most instances, corporate tenants would work for internationally known blue-chip companies or local authorities and the employees would be from outside of the UK. These large enterprises would more often than not cover the cost of the rental accommodation of their employees and their families. In some cases, the benefits would either partially or fully cover other living costs incurred by the family too, for example paying their school fees, etc. These privileges were mostly extended to valuable, high performing, high earning members within the enterprise when relocating from abroad. This style of corporate tenancy had rental contracts in the name of the company, with rent guaranteed and the employer responsible for damage and maintenance costs.
In recent years, the prospect of entering the corporate lets market for landlords has changed dramatically. Brexit, the COVID-19 pandemic and economic downturn uncertainty, as well as a vast improvement of communication and technology, means that less and less employees are required to be on ‘the ground’ so to speak, with working from home/remote working emerging as a trend which continues to grow and flourish. We are without a doubt in a time of great change and previous approaches make way for the new norm.
If you were fortunate enough as a landlord to come across a tenancy in the nature of the above, the properties of choice for these consumers were for the most part extremely high end, newly refurbished homes, with luxury furniture and design, situated in highly sought after areas. Why wouldn’t this be the case, with the consumers internationally known company covering the cost? The length of tenancy was also generally unpredictable and inconsistent – in most examples you would find that the move to the UK would be a temporary one for the corporate tenant and their desire would be to return to their native country at the earliest opportunity. Coupled with very high expectations, this arrangement would often place a lot of extra stress and workload on any landlord going down this road over a more traditional letting arrangement.
Working with a co-living operator and the benefits for a landlord
As an established co-living operator, our model provides landlords with the opportunity to avoid the current uncertainty and achieve an uninterrupted flow of revenue, guaranteed. Our model is simple, we sign a fixed long-term contract, and guarantee the rental income of a property, eliminating the risk of voids periods whilst also providing complete peace of mind and security of an asset with long-term contracts. All of this is provided along with no agent fees and complimentary property management, so that the rental figure agreed will be given to the property owner in full.
Effectively, we become the ultimate company tenant for property owners and during that time, we pay a guaranteed rental income that is in-line with market rates, every month, regardless of the occupancy status of that property. We organise any required maintenance and absorb all of the headaches that come with rental accommodation, whilst at the same time providing some of the finest co-living homes to young professionals across the capital.
For any person immersed in the world of UK residential property over the course of the past few years, it would have been hard to ignore the hype around the co-living emergence: homes re-configured and specifically designed to offer house share-style living, predominantly to the young professional market. Co-living has been on a constant upward trajectory and it’s showing no signs of slowing down, not just within the UK but also on a global scale. The mobile renter, who has often found themselves priced out of renting self-contained units of accommodation and has a desire to embrace community living with shared communal spaces, meet like-minded individuals, but also have a furnished private space to retreat to at the end of a long day, find themselves with the option for an all-inclusive, hassle-free charging model. Our occupants are all driven young professionals usually between the ages of 22 and 35, who now don’t have to settle for second best when it comes to the quality of their housing, as we ensure that we provide them with high-end accommodation for a host of different budgets.
What to look for when identifying potential co-living properties
At Co-lux living, we are incredibly versatile with the stock we take on from property owners. Our main goal is to provide quality accommodation to the market, however, not every property we take on initially is up to the required specifications. Whilst most of the residential stock we onboard is either turn key ready or only in need of some minor TLC, we can also take on real estate that requires a soft or full refurbishment too. The best part of all this? We can provide any refurbishment the property needs at no cost to the landlord. A common example of this would be a rundown property struggling to let on the market, with the owner not currently having the means or time to carry out any necessary improvements to let the property. This is where we come in, and take away the headache and hassle for the property owner. Not only does the landlord benefit from the guaranteed throughput of rental income gained from signing a long agreement with us, the value they will achieve will also extend to the property itself through the uplift they can gain from thousands of pounds in property appreciation, usually in the region of 10% of the property value, which for London property owners is a substantial gain when you consider the average property price in South West London is £799.481.
When identifying and choosing new real estate, we typically onboard properties which range from 2-6 bedrooms within a 10-minute walk of a nearby railway station and high street. If they are turnkey ready, great, if not then that’s fine too, we can then look for an opportunity to add real value.
What should landlords be looking out for when selecting an operator
Whether you are a landlord looking to offload one or even multiple properties from your portfolio, it’s important you carry out your due diligence on the company at hand. Start by looking into the present financial situation of any prospective company. This is important, especially during a time of downturn, as you need to be able to ensure that the company you want to work with can uphold their side of the agreement, letting you rest assured in the knowledge that you are passing on your asset to a business that is well prepared for any potential hard times or uncertainty. You need to be sure they have the capability, cash flow and liquidity to ensure that you are promptly paid the full amount of your agreed upon rental income, guaranteed, over the course of your working agreement together. Our best advice is to look for accredited businesses with a proven track record and great references from their current clients when gauging if an operator is aligned with your intentions for your property going forward.
Property investment is usually approached with a view to the long-term for private investors, and likewise most operators prefer to be managing properties with that same long-term view. With that in mind, it’s important to ensure that both parties are in alignment when it comes to their overarching aspirations for the property. For example, an operator would not want to enter into a long-term rental agreement with a landlord who wants to put their property on the market to sell as soon as possible and vice versa. We believe that when it comes down to it, you should always enter into this form of relationship with a view to ensuring that any agreement you come to is mutually beneficial for both parties. It really is worth putting the time in to finding the operator that works best for you, because with the right co-living operator, you will find that not only can they meticulously manage your investment while providing you with a guaranteed rental income, but they can also eliminate the stress and cost that comes with navigating your way through the current UK property letting market.
If you’re a landlord and would be interested to know more, please get in touch for deeper understanding of our services.
