With the advent of the likes of Airbnb and similar businesses, the perception of short-term lets and what they mean has changed significantly. These days, many look to immerse themselves in the local scene by renting homes, avoiding the usual hotels in a city as they prefer the comforts that this kind of rental offers. In addition, it is important to note this type of letting is not limited to tourists. Corporate clients are a big player in this field, with new employees that are relocating being put up for short periods in houses and apartments as opposed to being put in hotels. Many that are considering buying in an area will also decide to try it out first by letting short-term. These clients look for anything from several weeks to six months (the maximum that can be offered) and are an ever-growing sector.
Why Short-Term Let?
So why do owners offer their properties out on short-term lets? The obvious answer is the returns, as typically a property offered out on a short-term tenancy can achieve 30% higher returns than the standard long-term. The landlord can also have improved flexibility in their letting terms, adjusting the duration and terms of any agreement as they choose, something you are unable to do in standard tenancy agreements.
Things to Consider
There are of course downsides to these type of agreements and the bulk of the issues lie around security. Short-term lets like the type we have just described are short-term, they finish, and in a perfect world you would like to arrange a tenant to replace the old one almost straight away, but this is simply not possible. So the upshot of this is that with this type of letting you do have a lot of void periods and for those that worry that they need to meet regular payments and can ill afford to have their property empty is unlikely to opt for a short term let.
Short-Term Vs. Long-Term
In addition to this, not all councils allow you to do short-term lets, as in some cases, a 3-month minimum may apply, whilst some properties may have a 90-day limit. Another key problem with short-term lets can be wear and tear caused by an endless stream of tenants which will also eat their way through any profits – particularly as landlords can no longer claim a fixed 10pc wear-and-tear allowance. That said, it is felt by many that this is not the case and that those using a property for a base will spend little time there so conversely the wear and tear will be minimal versus that of a more traditional long term let. So I guess this argument depends on the client and weirdly could be either side of the equation, either beneficial or detrimental.
The landlord will need to cover costs in a short let that would otherwise be paid by a long-term tenant. These include utility bills, internet, TV licence and council tax. The property will also need to be fully furnished and well equipped, down to crockery, cutlery and bed linen – all of which means an additional expense that the landlord will need to factor into their calculations.
A Skilled Practice
Managing a short-term let is a skilled practice. Those who self-manage should not underestimate the amount of time they will need to dedicate to finding, managing and dealing with a constant changeover of tenants. An agent, however, will charge around double the long-term letting fee.
So the upsides are good for this type of let, but as you can see from the above it isn’t without its difficulties, as is to be expected given the enhanced returns you can achieve.
For more information about short and long-term lettings, speak to one of our relevant dedicated teams today. Our Skylet team are skilled and equipped with all you need to conquer short-term lettings, with our Lettings team helping you master long-term lets.