Short-term letting: what you need to know
Short-term letting, which can be anything from one night bookings to tenancies of around six months, can be a real boon to landlords.
Recent years have seen a rise in short-term lettings thanks to accommodation sites such as Airbnb and HomeAway. They can offer landlords an opportunity to maximise profits at a time of falling rents in real terms, lower tax incentives, and increased management and maintenance costs, particularly if the property is in an area where there is strong demand from temporary visitors.
Airbnb say they have 223,200 active listings in the UK generating £854m and earning owners on average £3,100 per year. This average climbs steeply in some of the UK’s major cities; in London hosts can earn £3,563 in just one month, while property owners in Edinburgh could make £1,959 and in Manchester £1,595.
Temporary lets certainly sound appealing; daily income is higher than long term letting; there are fewer legislative, financial and regulatory issues; and it can be less punitive, in some circumstances, for borrowing.
Despite the advantages, according to research from the National Landlord Associations (NLA), only 3% of landlords currently offer short-term lets, with just 24% saying it was something they had thought about.
And there are downsides and restrictions that any tempted landlord needs to consider if they are thinking of joining the short-let boom.
What to consider if you’re thinking of short letting your property
- It is important you understand your landlord mortgage terms and your existing insurance policy that may not cover short-term lets. You will need to tell both your insurer and lender.
- There may be considerable dead periods, especially if your property is outside of the bigger cities or more reliant of seasonal visitors.
- Maintenance costs will be higher as the properties need to be cleaned and the beds changed on a regular basis.
- Airbnb is coming under considerable pressure from local and national governments in the UK and abroad. They have already been banned in some cities and short-term lets have been restricted in others, including London where they are subjected to a 90-day let limit.
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