Short term letting is essentially the process of renting out your property for a short period of time, usually from a couple of days to 6 months.
The rental price you charge will be higher, to accommodate for any void periods, for example, you would expect to charge 40-50% more for a 3-month let than you would for a longer-term contract. Generally speaking, the shorter the length of the tenancy, the more expensive it will be.
What type of property should I invest in?
The most likely tenants you’ll have are business professionals travelling to or within the UK, families in need of temporary accommodation, or holiday makers on a city break.
Location is the key component. Choose a property in a central location, in a city with a thriving business centre, such as: London, Manchester, or Edinburgh. The most popular short-term lets are always in close proximity to public transport routes, local amenities, restaurants and shops.
Short term letting gives you maximum flexibility. You choose the days, weeks, and months you want to rent your property.
Less wear and tear on your property. As tenants move in and out more frequently, smaller issues can be spotted easily before they’re able to turn into bigger problems.
You can now earn up to £7,500 in rental income before paying any tax. As this is around the national average, it means that the majority of live-in landlords can avoid tax altogether.
Short-term lets are often extended. Perhaps your tenant is in town for business and needs to stay on a little longer to close a deal, or maybe you have a family staying whilst their house is renovated and their builder needs another few weeks to finish the job. Either way, you’ll benefit from a longer let at a higher rental rate.
Things to consider:
Recent changes in the law, mean that homeowners in London can rent their property for up to 90 days in a calendar year without seeking approval. However, if you’re wanting to let for longer, you’ll have to apply for permission which can be trickier.
Getting the right kind of insurance is vital. You’ll need to make sure you cover all bases so that you’re not left exposed should anything be damaged, stolen, or broken.
Terms and conditions in freehold leases and mortgage agreements can quickly put a stop to the idea of a short term let. Check your details before deciding to change the type of letting you offer, as a worst-case scenario could mean forfeiting a mortgage.
Be prepared for void periods. As much as you’d like a new tenant to move in the day the previous one moves out, it rarely works that way.
The Airbnb Revolution
Airbnb has been a game-changer for the short-term letting market. A stay in a private property offers guests a more comfortable and personal experience than a stay in a generic hotel.
Properties in London makeover £100 per night on average, which means renting your property out whilst you’re away could potentially cover the cost of the holiday itself!
In today’s society, the expectations of Airbnb guests are growing higher and higher. Facilities and amenities like coffee machines, complimentary toiletries, or an unlimited supply of logs for the wood burner are fast becoming the rule, rather than the exception.
As a result, hands-on property management is now a necessary component in the successful management of short-term lets and subsequent generation of the growth of income from your property.