Property investment can pay off if you choose wisely. If you are planning on renting out your home, deciding between short-term holiday lets or long-term letting can be a difficult decision. Factors to consider include monthly rent, potential for growth, and city or rural location. Here are some things to think about before choosing an investment property.
What are the differences between short-term and long-term leases?
Short-term rentals often offer more flexibility in terms of pricing and length of stay. They are also more common in cities with tourist attractions that attract people from all over the world. They're perfect for people who need a place to stay for a few months while they're between homes or who want to spend some time in a new city without the commitment of buying a home. They're also a great option if you just need somewhere to crash while you're on vacation.
Long-term rentals are typically more affordable than short-term rentals, but they require a longer commitment on the pqueriesart of renters. Renters should make sure that they have enough money to cover their rent for three months or more at a time before signing any contracts for long-term housing arrangements.
Pros of Airbnb
- Holiday lets have the potential to be extremely lucrative. They command a far higher rate than a long-term rental and can be available for a large portion of the year, with the owner able to make money from it at any time.
- Holiday lets have less rule to follow in the UK. The government has made it easier for people to rent out their homes, with new rules that mean they only need to pay tax if they earn more than £7,500.
Cons of Airbnb
- Since Airbnb guests come and go every week, your property will need more maintenance than if you were renting it out to a long-term tenant. As an Airbnb host, you will have to spend time messaging your guests, sharing the property location details, and handing over the keys. If they have questions, you should be available to answer them promptly. Whilst Airbnb and other platforms do provide some protection against claims or losses, these decisions are at the discretion of Airbnb (or whoever you’re renting with) which may not go in your favour.
- However, the flexibility of being your own boss comes with the risk of occasional void periods when you have no income. As the global financial crisis has shown, unforeseen events can leave you without an income for long periods. If your property relies on seasonal tourism, this could be a risky option. If you’re relying on your rental as your primary source of income, this may not be the right choice for you if cancellations are an issue—that is, if next guests cancel last minute, it’s unlikely someone else will book in with such short notice and you’ll lose money.
Pros of Long-Term Let
- Long-term rentals generally require less involvement than holiday lets. Before the tenant moves in, landlords should check their credit and references, draw up an agreement or lease, and take a security deposit. Once the tenants move in, most landlords visit the property for routine inspections and maintenance about once every six months. The tenant may contact you regarding emergencies and maintenance issues, but it's up to you how to handle them. Some landlords prefer to take care of maintenance themselves if they live close by and know people in the trade; on the other hand, others prefer to have an agent handle maintenance issues on their behalf—but this can be more costly than doing it yourself if you are handy yourself.
- The main benefit of a long-term rental over a holiday let is that you can screen your tenants and select the right people to rent your home. At viewings, you’ll be able to meet your tenants and get a feel as to whether they’re the right fit for your property.
- More tax-efficient because you can deduct the costs of running your home from your rental income
Cons of Long-Term Let
- There are often more rules and regulations in a long-term let than a holiday let.
- If you want to make changes to your contract, such as increasing the rent or adding extra tenants, you will need to go through the whole process again.
Which You Should Choose Between Airbnb or Long-Term Let?
There are many benefits to short and long-term lets. Location, costs, maintenance and flexibility are just a few of the things to consider when it comes to deciding which is best for you. If you’re still pondering which is best for you, ask yourself these questions:
How much time will I spend at this property? Short-term lets may be best if you plan on staying in a single location for less than 3 months at a time.
How much space do I need? If you need more space than a studio or one-bedroom unit can offer, or if you want the option of having extra friends over without worrying about how many people can fit on your sofa bed, then long-term lets might be better suited to your needs.
How much money do I want to spend on monthly rent? Short-term lets tend to be more expensive than long-term ones because they require more upfront costs like cleaning fees and deposits that aren’t required with longer contracts
What are your thoughts on Airbnb vs. Long-Term Lets?
Bluestone Properties
We are letting agents and estate agents in south London. We are here to help you find your dream home or let your property. We have years of experience in the industry and will make your house hunting process easy and stress-free.
