Airbnb made the short let popular, but it's been a viable option for landlords for decades. And you don't need to have an account with the online rental marketplace to let out your buy-to-let on a short term basis.
But should you even go down the short let route, or is it all about long-term tenancy agreements with high-quality renters who find a home in your property? That's the question we're asking in our landlord resources guide, where we're looking at the pros and cons of short-term letting and whether it's a viable option for landlords who want to maximise their rental income.
What is a short let?
A short-term let is typically considered any type of rental contract that lasts for up to six months. Whereas anything over six months usually requires an Assured Shorthold Tenancy (AST) and is referred to as a long-term let.
Short-term lets can last for as little as a few nights or go on for months, depending on the initial agreement. And, contrary to popular belief, Airbnb isn't the only way to let a property in the short term. Many letting agents also list short-term properties on the rental market on behalf of landlords.
What type of renters go for short-term lets
Renters move for all sorts of reasons, whether they're looking for a place to lay down roots or somewhere they can stay in the shorter term. Short-term renters usually can't commit in the long term and need a home for a few days, weeks or months.
This might be because they're moving from abroad or another UK location and want to get to know an area before committing. Or it could be that they're relocating for work for a few months, therefore can't commit to somewhere in the long term.
Are there any financial differences between short and long-term lets?
Short term lets only last for up to six months, which means you won't receive as much rental income as a long term fixed contract. That's why short-term lettings usually command higher weekly rents than longer-term stays.
It's not uncommon for a home on the short term lettings market to receive a significantly higher valuation. For example, a rental property that lets for £425 per week on a fixed long-term AST could achieve in the region of £950 on the short term lettings market.
Now, before you start rubbing your hands at the thought of a 123% increase, there are caveats to take into consideration….
While there is a higher mark-up on short-term lets, the chances of void periods are much longer. You only need to find one renter for a long-term let on a 12-month contract, but short lets will see you needing to source renters regularly throughout the year.
One of the primary reasons for the higher price on short-term lets might be the longer void periods. But landlords also typically pay for the cleaning on short lets too, which needs doing every time someone vacates the property.
So, the rental income is higher but so too are the outgoings – whether it's an agent/Airbnb fee on every let, cleaning costs, increased maintenance costs or longer void periods. If you're only letting out your property for the short term, the renter will expect it to be fully furnished too. Which means that you will need to take into account the cost of furnishing your buy-to-let.
When is the best time to short let?
Potentially, there are a few short-let sweet spots throughout the year – though it depends on your property's location. If you live in a high-value area for tourists, such as Hampstead, Marylebone or Islington, your property will be in demand with holidaymakers.
That's not to say that other parts of London or even Manchester can prove fruitful for the short-term lettings market. Good travel links will increase your chances, as will closeness to local amenities like shops, cafes and restaurants.
Landlords that want to let their home during the holiday seasons will see boom periods, whether it's summer, Easter or near Christmas and the New Year. If you're looking for lets that last for a few months, however, the time of year isn't as important for maximising your property's demand.
Should you rent out your home on a short let?
Only letting your home on the short-term market doesn't provide the same security as a long-term let. You also need to factor in the increased use from multiple renters, as opposed to a long-let, which only has one person using it.
However, short lets can prove to be a handy money earner for landlords. It's even possible to advertise your home on the short-term lettings market in between longer-term rentals, potentially increasing your yearly yields and reducing void periods. The short-term lettings market offer a different option for landlords, which can only be a good thing for the rental market and for renters.
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