Much like Short-term letting, there are advantages and disadvantages of each, depending on what your individual needs are and what you are hoping to receive from your buy to let.
Defining Long-Term Letting
Before we take a look at the advantages and disadvantages of long-term letting, it is first important to define what constitutes to a long-term let. A longer-term let typically lasts for a year or more and offers a landlord a degree of stability and confidence that isn’t often found with short-term lets. Typically, the renter moves in and from that point onwards all you typically have to worry about is collecting the money on a monthly basis.
Pros of Long-Term Letting
The costs for long-term lets are markedly lower, as unlike short-term lets you are not responsible for the costs of running the property like utility bills, tv licences etc. – this all falls on the tenant. Add to that the lower cost of managing this type of let, again an agent will charge a minimal fee to run a long term let as they are less hands-on and they do not have to keep dealing with hangovers and checking property as you do with the shorter lets. Also with a long-term let you do not have to go through the expense of furnishing the property as many tenants, not all, bring their own furniture to a property when they move in.
So generally the pros of a long-term let are that you have less hassle, have a more assured rental income, albeit lower, and have a degree of freedom in that you can let the property and forget about it, almost.
Con’s of Short-Term Letting
On the flip side, the things that make a short-term let good are what make a long-term let not so great. The first major issue you may have is if you are unfortunate enough to get a difficult tenant then given the length of the contract you are stuck with them until it terminates unless you have a break clause incorporated. With a short-term tenant, any issues and you are well within in your legal rights to remove them, legally this is way harder with long term tenants.
Another issue with long-term tenants that has also been cited as an advantage is the payment of rent. If you get a difficult tenant or one that falls into difficulty you may have issues with the payment each month and if they don’t pay the law often protects the tenants and it can take time/money to get them out and retrieve the lost income. This risk can be mitigated somewhat from the offset with a good set of references from previous landlords so should once again if you have done your homework should drop into the pros column.
When it comes to wear and tear some say that short-term renters are worse and have a bigger impact, others say that longer-term clients do. So generally I would suggest again this does depend on the clients, some people are careful and look after a property, others don’t, but generally speaking, it is my view that someone living long-term in a property will be more respectful.
Knowing Your Individual Needs
Whether you opt for a long- or short-term let will largely come down to your own individual circumstances and preferences. Knowing what you want to get from your buy-to-let business will allow you to make the right decision on whether stability or flexibility are the most important aspects of your investment portfolio.