As a property owner, you have many challenges to deal with.
From how to find the perfect tenants to choosing a landlord insurance policy to cover your property, there are many things to consider.
Another such issue is deciding which lettings format is right for you. Developments over recent years have kindled debate around this topic.
Since the beginning of the Airbnb era in 2008, the popularity of short-term letting has skyrocketed among landlords.
Airbnb revenue reflects this. By 2021, Airbnb’s yearly gross booking value had grown 6 times over in as many years.
On the surface, it seems like a reasonably lucrative option for landlords as well – the typical UK Airbnb host earned £6,000 in 2021.
Yet as far as investment returns go, this figure is hardly a world-beater.
So, is short-term letting a fad or do the benefits explain its popularity?
Here’s a short guide to explore these questions. But first, a quick refresher on what short-term letting is.
What is short-term letting?
Short-term lets are rental agreements that last for less than six months.
Their durations most commonly last between a single night and a few weeks.
Usually, short-term lets will be used by people who are in the area for a limited time – people who are travelling for business or pleasure.
Platforms such as Airbnb and Booking.com have helped boost the popularity of short-term lets, giving users easy access to hotel alternatives and landlords a simple way to advertise their properties to tenants.
Pros and cons of short-term letting
There’s clearly a market for short-term letting.
But if you’re thinking about cashing in on the trend, what are the main pros and cons you need to know?
Pros
• Flexibility: You can choose the months, weeks and days that you rent your property, doing so as much or as little as you want.
• Higher potential returns: Short-term lets generally bring more money in per contract. If you can keep your property booked up throughout the year, you could make more than with traditional long-term letting.
• More adaptable: Thanks to the short lengths of contracts, you’ll be able to adjust your prices more frequently to adapt to the market.
Cons
• Higher expectations: Tenants usually expect more from short-term lets, including furnishings, utilities and an attractive design as standard.
• More work: You’ll have to manage a higher number of tenants, as well as carry out more cleaning and maintenance on your property as a result.
• Greater risk: Short-term letting comes with greater uncertainty – you could find that you have fewer tenants during different periods for no discernible reason.
There are good reasons why short-term letting has become so popular.
Yet it has its drawbacks just like any other property investment format. Will you be jumping on the bandwagon?
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