Short Term Rental Property Vs Long Term Rental Property?
Okay, so it might not be the classic age old debate of ‘is it called a barm or breadcake’, or ‘do dogs make better pets than cats’ (they do). But we have noticed an increase in property investors asking the same question: “should I invest in a short term rental property or long term?”.
Based on this, we thought it would be beneficial to write our latest blog post comparing the advantages of both short term and long term property investments and which investment could suit you.
What is a short term rental property?
A short term rental property (also known as serviced accommodation) is one let by a landlord for a time period as short as a few nights, up to six months. Any longer than this would require an AST, which we’ll go into when we discuss long term property rentals.
Short term rentals are a great alternative for renters who only need to be somewhere for a short time. This can include business travellers, people on holiday, families having their own home renovated and more.
It is fair to say that the short term rental market is booming and increasing in popularity all across the UK. It’s a great market to be invoved in and is a major opportunity for landlords and investors.
Short Term Rental: Advantages
One of the main benefits of a short term rental property is income. Not only will your property benefit from capital appreciation, landlords can charge a higher rate for the property, which in a lot of cases can be up to 50% higher than if rented out long term.
There is a higher risk with short term as your property might not be filled 100% of the time, although due to the higher potential rents, you don’t need to have the property occupied 100% of the time in order to secure a much higher overall yield.
Another great advantage is the tax benefits. We’ve written a whole other blog post on this, which you can find here. Some of the tax benefits include, bypassing of Section 24, Capital Allowances / deductible expenses, Capital Gains Tax relief AND council tax relief.
There may be a greater workload with short term rentals, however you can reduce this by hiring a professional management agent (such as Switch Property Management) who can take care of all guest communication, cleaning, maintenance, and more. For the cost of a small percentage of the monthly rental income, you can enjoy all the benefits of being a landlord with none of the hassle.
What is a long term rental property?
A long term let is the standard for the vast majority of lets in the UK. It is an agreement between the landlord and tenant which lasts for a minimum of six months, and often much longer. A long term let is most commonly organised under an Assured Shorthold Tenancy (AST) agreement.
An AST provides long term stability for both parties, although it typically favours the tenant.
Long Term Rental: Advantages
A long term let AST will provide you with a steady, reliable income stream which gives you monthly income. Once you have a long term let in place it is potentially much less work than a short term let property.
Rents are continuing to increase in 2023, so if you are considering renting out your property long term, speak to our friends at EasypeasyMove. They offer bespoke packages for landlords, which allows the landlord to pick and choose exactly what they want, and only paying for that service. Letting with EasypeasyMove will get your property on Rightmove for only £49.
To sum up, the work load of a short term rental could potentially be a lot higher than with a long term rental, however, thats where we come in. We’ll take away that work load, allowing you to potentially earn more whilst doing less. In short, a short term let property can be a valuable addition to any portfolio with many financial advantages for landlords.
NB: This blog is meant for information purposes only. We strongly advise you speak to your accountant, or relevant professional, for up to date advice before you make any decisions or proceed.
