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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

The Contractor Accommodation Market

The changing property investment climate and lettings market over the last couple of years has led some investors to look around for better yields. There are a few options of course, but one to consider is the contractor accommodation market. So in this report we will look at the market now, at future prospects and at some of the opportunities to get involved.

Most people would probably consider the contractor accommodation market as providing short term accommodation for contractors, particularly contractors working in the construction industry. However, the term is slightly ambiguous. Although construction contractors comprise the largest part of the business there are contractors in other industries too, such as mechanical, electrical and environmental engineering, IT, aviation and marine industries, health, education and agriculture. Also, not all contractors are contractors as such. They may in many cases be directly employed by the contracting company, some kind of agency or also be sub-contractors. But the common linking factor in this market, so far as investors are concerned, is the opportunity to provide accommodation for people working in a particular area on a short or medium term basis.

Pros of providing contractor accommodation
Before going any further let us take a look at the pros (and cons) of providing contractor accommodation. First and foremost is
the prospect of making better yields – particularly in areas where demand for accommodation rises due to a large project but supply is limited – and on top of the higher yields that are usually possible in the case of shared or HMO type accommodation. Very importantly, so far as many landlords are concerned, contract workers tend to be less troublesome than similar shared accommodation investments. They are generally earning a good income, and in some types of contracting well above average national income, don’t bring anti-social behaviour problems with them, nor hold student parties.

One of the most important advantages, however, is the potential for high and increasing demand for this type of accommodation in the future. According to ONS figures from 2015, there are 1.2m people working for private contractors in the construction industry alone. Currently, as most will be aware, the UK is undergoing something of a building and infrastructure boom, with many more large projects on the horizon. Additionally, the 2016 Autumn Statement announced a number of initiatives aimed at boosting transport, energy, communications and housing investment – from 0.8% to 1.2% of GDP by 2020. According to just one source, the Construction Products Association, infrastructure projects will become the biggest contributor to the construction sector over the next few years, with infrastructure projects increasing to around 57% of total construction work. #S

There are, of course, a few downsides to consider with the contractor market. By its very nature the contractor market can be
a fluctuating market, comprising short and medium term letting opportunities – of anything between one week and one

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