A new lobbying group is to urge the government to give serviced apartments in London greater priority in the face of a growing and unsatisfied demand.
The Association of Interim Housing Providers – which currently comprises serviced apartment operators BridgeStreet and Oakwood – is to be revamped under a new title to lobby for changes in planning policies.
Lynn Glenn, general manager at Regalians joint venture partner Oakwood, said: “We will be concentrating on any cases that relate to what we do and how we operate, such as campaigning to allow sub-90-day leases. We hope to get other organisations on board.”
London lags significantly behind other cities worldwide in the supply of serviced apartments. Although demand significantly outweighs supply in this sector, planning policies are hindering growth.
Interest group London First is also keen to see changes in the industry. The group carried out research this summer which found strong demand for serviced apartments (see box above).
And a report on the market out this week by FPDSavills, says that serviced apartments represent only 5% of all visitor units in London compared with 9% in the US metropolitan areas.
In London, the sector amounts to just 3,355 apartments compared with 200,000 in the US. The report identifies a potential 1,229 apartments in the pipeline in 13 schemes, but this would represent a supply expansion of only one-third.
Local authorities tend to resist proposals for any developments that would result in a net loss of housing stock, making it difficult for the sector to expand.
Head of hotels at FPDSavills Gerard Nolan said: “From a global perspective, London is behind the times. A third of our revenue comes from tourism and yet we do not have the facilities for people wanting short-term accommodation.
“Serviced apartments are very profitable because they are like hotels but without the facilities, so the cost of development is pretty low. Now so many people travel with their companies, there is far more demand for light, flexible accommodation. Serviced apartments bridge the gap.”
The biggest expansion over the past year has been in business apartments – the sector now accounts for over one-third of current supply.
Agents would like to see some changes to the rules governing the short-let sector. The 90-day rule, which aims to distinguish between hotel and rental use, has a significant effect on this sector of the market.
Under this rule, short-let apartments within London cannot lawfully offer accommodation for less than 90 days – this gives rise to a significant “grey market”.
Richard Donnell of FPDSavills Research said: “There is not a lot the local authorities can do to monitor this rule and, because of a shortage of accommodation on offer in the sector, there is a growing grey market.
“We would just like someone to recognise that people sometimes want to stay for less than 90 days in serviced apartments.”
A survey carried out by London First in June and July this year revealed strong levels of current demand in the serviced apartment sector, and these are set to increase. A lack of availability was a problem for 35% of respondents, while 63% said their demand for serviced apartments would increase in the future.
Executive director of London First, Judith Solomon, said: “The 90-day rule is restricting the supply of something thats very important to international occupiers. The planning criteria are too restrictive, and need to be applied in a more even way.”
Guy Nixon of serviced apartment operator Go Native has found that demand from overseas visitors in the sector outweighs supply.
He said: “The 90-day rule is a debilitating rule that doesnt do London any favours. It contributes to making London more expensive than it would otherwise be.”
EGi News 08/09/00
