Serviced apartments: A planning consultant’s perspective
We talked to Chris Benham, Partner in the planning team at Knight Frank about the rise of Serviced apartments within the alternative asset classes
You’re regarded as a serviced apartment / aparthotel planning specialist. What has drawn you to this hospitality sub-segment?
I had some good clients who were pushing into the sector and I built up a track record with them. Having that track record, and getting out to talk to as many people as possible was really the catalyst, along with a good dose of luck.
All the signs were that it was a sector with great growth potential, with some pretty innovative people looking to capitalise on it. I liked the nuances of the sector, and that you have to be creative to convince officers that planning permission should be granted. It is rarely straightforward. For the last 5 or so years, most of my work has been in serviced accommodation, whether that is Serviced apartments/Aparthotels, hotels, student, co-living etc. I find the crossover between these sectors really interesting, and I am able to draw on my experience of these various types of development to create planning strategies for my clients. I now look after all of these sectors for Knight Frank Planning.
Post-covid where do the opportunities lie for serviced apartment and aparthotel development?
It strikes me that there are a lot of traditional hotels out there either in situ, or with planning permission but not yet delivered. Now is a good time to pick up these sites and look to shift to an Aparthotel model.
London will recover from the current economic situation, and that will attract people to the City in search of work both from the UK and abroad. The Aparthotel has a role to play in supporting this for example, by accommodating people for 6 months whilst they settle into London and work out where they want to live permanently. The housing market cannot support these people in the same way, as ASTs and the admin and financial burden of renting a home are off-putting. The Aparthotel offers a better alternative.
We already know that corporate favour the Aparthotel model for their staff undertaking project work if they need to be away from home for an extended period. I’d expect that position to remain the same, albeit it may take some time to get back to pre-Covid levels. Given travel restrictions look like a permanent fixture, we might also see international guests come to the UK and stay here to conduct business rather than travelling onward in Europe. Ensuring the Aparthotels have the technology available to guests to support this could be important.
As a final point, there is certainly an opportunity for Aparthotels to claim market share from the likes of Air BnB and others, not least because of increasing regulatory pressure on these businesses, but also as a result of their stock reducing as properties are returned to the housing market. The demand for this type of accommodation remains/will return, and Aparthotels should be able to capitalise on this – offering a better quality and more consistent experience for guests.
Will serviced apartments benefit from the recent change to commercial planning classes?
Unfortunately not. Along with a number of other sectors that have been lobbying for a new Use Class, aparthotels/serviced apartments have been overlooked. Aparthotels will continue to be considered Use Class C1 and serviced apartments will typically be Sui Generis. The debate about the 90-day occupancy rule will therefore stay with us for the foreseeable future.
However, on the plus side, the new Use Classes give developers and operators more freedom to curate a great product for guests. The new Class E would enable a blend of F&B and workspace, along with other uses/services that guests might find attractive. Given the current situation, perhaps health facilities will be popular for guests. Where the current system may be restrictive and get in the way of innovation, I’m hopeful the new Use Classes will favour the brave!
With reduced business and leisure travel operators in London have pivoted to a long-stay model, but what about the 90-day rule?
In London, the imposition of a planning condition that restricts hotels and aparthotels to a 90-day stay has become prevalent, and as operators look to gain extended stays beyond this time frame, they will need to remove the restriction. I am currently engaged by clients to seek the removal of the 90-day restriction on aparthotels with the intention of enabling those buildings to be occupied for extended periods. Clearly, councils will be resistant to the idea for fear of Aparthotels becoming ‘residential’ and missing out on affordable housing, but there are other ways of ensuring this doesn’t happen without stays being restricted. There are also a number of benefits to allowing extended stays, such as to the housing market and the economy, and it is important to get this case across.
I also think there is also scope for the hotels and aparthotels to become a form of co-living. It’s not necessarily an easy process but there are definitely opportunities in this space for those who are willing to get creative.
Contact Saxbury for general advice in connection with obtaining planning permission for a proposed Serviced apartment or Aparthotel development project, or write to Chris Benham at Knight Frank.
