What Are The Pros and Cons of Short-term Letting?

Short-term letting can be a lucrative business, but it also has its risks. We look at the pros and cons of premium rate property

If you are a landlord, the main incentive to let on short terms is that it offers a premium rental rate. But are there downsides to this potentially lucrative business?

You can blame it all on Airbnb. The online private letting website set the trend for offering private properties for short-term stays. For many, this offers a level of comfort and convenience you wouldn’t find in a hotel, and is a more welcoming experience for the tourist.

Also, for many tourists a short-term private let is a cheaper option than a fortnight in a hotel, particularly in expensive areas like London.
Of course, demand is particularly high in these metropolitan areas, so landlords there may have more choice of tenants.

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The biggest drawback to short-term letting is the possibility of ‘void periods’ when you have no tenants. It’s easy to lose that 30 percent premium when your property is empty. Conversely, when it’s occupied by a stream of tenants you may suffer more than usual wear and tear. Until a few years ago there was a fixed 10 percent allowance on net receipts from furnished letting to compensate for wear and tear, whether you actually had to spend anything or not, but now landlords can only claim for actual expenditure.

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In short-term lets the landlord is responsible for furnishing and equipping the property, and for bills such as utilities, broadband, TV license and Council Tax, as well as being expected to deal with any repairs or emergencies immediately. A property management company can take a lot of this responsibility off your hands, but be aware that you will probably be charged double the fee you would for a long-term let.

See also: What Are The Pros and Cons of Self-Build Homes?

Try for size

Premium properties can appeal not just to tourists but to a wide range of customers, such as relocating professionals, short-term contract workers, homeowners who have to move out while renovations are done on their property, house sellers waiting for a new property purchase to be complete, and people who want to experience an area before committing to a move.

In some cases a property owner may be planning on selling in the future, but may not want to have it empty in the meantime. A short let can give them time to take stock of the property market or to rearrange their financial situation. Then, when they want to sell, they don’t have to wait too long for the let to end.

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Martin Roberts’ Tips

“If you are thinking of short letting, make sure that you are covered by insurance. It’s unlikely that a standard house-and-contents policy will cover you for letting, so you may need specialist buildings and contents cover, liability insurance in case of injury or damage, and insurance for loss of income, in the event of, say, a fire or flood.”

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Merilee Karr, Chair of the STAA (Short Term Accommodation Association), views short term rentals as a complementary part of any property portfolio, but says they “require a lot more involvement and daily management. If you don’t want to take that on yourself, there are fully managed options like UnderTheDoormat, but also services like Hospiria who can offer a marketing and distribution only option, whilst you handle the operational elements. “You can find all the relevant regulatory guidance on the Industry website, www.ukstaa.org/policy.”


For landlords, the good news is that a short let can potentially command rates about 30 percent higher than a long-term rental. They’re also flexible, as tenancy contracts can be extended in weekly or monthly increments.
Limitations could be imposed by your local council or mortgage lender – some councils have a three-month minimum, and some mortgage lenders will have a three-month maximum!

If you are a leaseholder, check the terms of your lease – the freeholder may want to restrict short-term letting through covenant or administration charges. There is no limit to the number of days you can rent out a portion of your home during a calendar year so long as you are living there at the same time.

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As an individual property owner (or host) or a portfolio owner, you can get accredited by the STAA to reassure your tenants that you comply with all standards – increasingly important in the current environment. ■

This feature was originally published in Property & Home with Martin Roberts, Winter 2020 issue – read more here.

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