What is ‘flex-leasing’, the buy-to-let investment approach from the US?

A new term is trending in the property industry in the UK, which investors should have their eye on. The ‘flex-lease’ concept promises to reward investors of buy-to-let property with lower risks and high premiums. So, what exactly is it?

The idea originated in the United States and has made its way to the UK. In a nutshell, investors allocate 10 – 20% of a residential property to short-term rentals and the remaining time to long-term rentals.

This hybrid approach enables investors to capitalise on peak prices for short-term lets, namely in holiday seasons when demand for short-term rentals in high.

While renting out property on long-term tenancies has its clear benefits, chiefly pulling in a consistent income irrespective of the season, these types of tenancies are not without their drawbacks. One leading downside is that they lock prices in, so that if rental prices suddenly spike, contracts cannot be changed, giving a landlord less flexibility over pricing.

By contrast, short-term lets provide a higher income potential, with landlords able to increase prices in peak seasons and generate greater profit. However, the short-term accommodation model is not without its drawbacks, the biggest being that it can be difficult to secure an income in low, dry seasons and revenue fluctuates from month to month.

The hybrid ‘flex-leasing’ approach can offer the best of both worlds, enabling investors to pull in maximum profit during peak times, while enjoying a steady reliable income during quieter, off-peak seasons.

If you’re thinking about investing in property for the rental market or are a landlord wanting to add to your portfolio, purchasing property at auction can be a great way to find the right investment. Check out the lots we have listed in our forthcoming auction in London.