Long term lets are good for stability and short term lets could be better for maximum profit. As a landlord with a desirable property, it can be difficult to know whether back-to-back short term lets or long-term tenancy is better for maximum profit.
In this guide we’ll explore the various drawbacks and benefits of each to decide which is the better option.
Is It More Profitable To Rent Out Properties Long Term or Short Term?
When it comes to pure finances, short-term rentals can work out more profitable for quick gains. In London, depending on the area, Airbnbs can be rented out for an average of £181 British pounds per night (according to Statista), giving them a very good rental yield.
London is one of the leading UK cities for short-term rental bookings with the highest number of nights reserved.
However, short term rentals could also come with higher running costs. With more frequent turnover and higher likelihood for damage or negligence, short term rentals come with greater risk.
This could lead to higher repair and maintenance costs as well as giving rise to potential legal issues such as neighbour complaints. All of this should be factored in when considering profit.
Additionally, for short term rentals there will be periods with no tenants. If this happens, you will lose money during all the time that the property is unoccupied. Working with an Airbnb management team can ensure that occupancy is maximised for maximum profit.
For expert Airbnb management in London, contact Jessica at info@jpropertymanagement.co.uk today.
Are Long Term Lets in London Profitable?
The short answer is yes. London is a hub for students, business professionals and families and there is always demand for rentals. If you opt for a long term let, you could benefit from stability and property appreciation.
While you may not make as much money per night, you have more consistency with renters.
With an average tenancy length of 12 months in London, you can guarantee consistent payments. Also, the average monthly rent in London is £2,121 – so you can still look to be making a big profit if you keep your expenses down.
What Are The Benefits of Short Term Lets?
Short term rentals offer greater flexibility for landlords as they can block off specific dates. This is great for landlords who are renting out a second residence or who want to invite family or friends to use the property whenever they are around.
Long term rentals, on the other hand, mean that the tenant makes a commitment to stay in the property for an extended period of time. During that time, the landlord will not have access or use of the property.
The flexibility gained from short term lets could be a benefit for many property owners, especially those looking to use their property as a holiday home or second residence.
Do Long-Term Lets Offer More Stability?
Long-term rentals offer a more predictable income stream. By renting out your property with long-term lease agreements, the tenants make a commitment to pay rent for an extended period of time. This will be decided between the landlord and tenant but could be anywhere from a few months to several years. Thanks to this agreement, the landlord has a greater sense of security and stability.
This means that the landlord can count on consistent payments for a certain amount of time and, as such, can plan their finances accordingly.
Whether it is saving for future investments, property upgrades such as repairs or maintenance or even a personal purchase such as a retirement or holiday fund, this long-term financial stability can be hugely beneficial to landlords.
Short-term rentals offer less stability. Even in cities like London, where people visit all year-round, the market is saturated with short-term rental options. That means that you could be competing with other rentals in the area and there is risk of the property sitting unoccupied for extended periods of time,
Long vacancies in short-term rentals offer more stability, however they pose risks of their own. It can mean that issues – such as damage, plumbing problems or leaks – may not be promptly detected and dealt with quickly. Consequently, these undetected issues can worsen without anyone knowing and become a serious and expensive problem in the future.
Do Long Term Tenants Look After Properties Better Than Short Term Tenants?
Long-term tenants are looking to make a property their home as they are staying there over an extended period of time. As a result, they are far more likely to preserve the condition of the property and look after it well. From a landlord perspective, that means less wear and tear and makes damages or neglect less likely.
Not only that, as long-term tenants are living in a place full time, they are likely to report any issues as and when they arise. That allows the landlord to coordinate repairs or inspections as soon as possible which could save more expensive problems in the future.
Due to the predictability that comes from long-term rentals, landlords also have the opportunity to plan maintenance or repair work in advance. In between long-term rentals, landlords can use this time to upgrade the property with any necessary repairs or renovations.
Extended lease periods allow for that type of planning rather than the potential financial pressure of immediate repair demands with short-term rentals.
Renting Out Property: Long Term or Short Term Let?
So, long term or short term? The decision will depend on your priorities – are you hoping to maximise profits in the short term or have a well-maintained property with stable income for years to come?
If you have a multiple property portfolio, you could try out both models. Whether you choose to rent your property out as a short term or long term let, working with a property management company can help optimise occupancy, keep your property well looked after and maximise your profit.
For expert property management in London, contact Jessica at info@jpropertymanagement.co.uk today.
