Short-term tenancy agreements: what landlords need to know
What are the pros and cons of short-term letting for landlords?
As with any type of rental, there are upsides and downsides that every landlord should consider carefully before moving ahead with short-term letting.
Here are our top three pros and cons:
Benefits of short term letting
Short-term tenants are prepared to pay a significantly higher pro-rata weekly rent than long-term tenants, in return for high-quality, all-inclusive accommodation.
Research by Vanquis Bank published in October 2020 showed that in many cities, landlords could expect to earn between 30 and 86 per cent more by letting rooms by the night, compared to having a long-term tenant.
And if you let your own holiday home for most of the year, that could generate enough revenue to cover the costs of owning the property – even while you’re using it yourself! – with some extra income on top
It allows you to make money at any point in the year from a room or property that might otherwise be sitting empty
It should be easier to evict troublesome tenants with a holiday let!
If you’ve let a property on an AST, a troublesome tenant can take many months and be very expensive to evict.
However, on the rare occasion that you might get a less-than-desirable short-term tenant in a holiday let, the good news is that they’ll hopefully be gone fairly soon
Downsides of short term letting
More time-consuming to manage
With short-term lets, you’re often more a ‘host’ than a landlord, and your tenants are more like ‘guests’.
Given that they may only be staying in the property for days, rather than weeks – and particularly if it’s a holiday for them – it’s even more important than usual to check them in properly, making sure they know where all the facilities are and how everything works.
You also need to be on hand in case they have questions or there are any problems during their stay in the property, and then the property will need a complete turn-around before the next guest arrives.
Because of this extra level of management and service required, many landlords choose to use a professional short-term let company to operate the let on their behalf
With higher rental prices come higher expectations, so – especially given the high level of ‘traffic’ through your property – you’ll have to spend more on maintaining the décor, furnishings, fittings, linen and equipment than you would in a long-term furnished rental. And don’t forget to budget properly for a thorough clean between occupiers
Although pro-rata daily rental income might be substantially higher than with a longer-term tenancy, there will naturally be more void periods.
And, because many short-term lets are dependent on tourism, tenant demand can peak and trough depending on the time of year and various economic forces beyond your control, as we’ve seen during the pandemic
