Short-term lets can be a lucrative business, but the premium rental rate on offer will often come at an additional price for landlords. In the past few years, Airbnb has widely changed how short-term lets are perceived. For tenants or guests, staying for a short period in a private home can often provide a more comfortable, personalised experience compared to a hotel or serviced apartment.
For property owners, short-term lets provide access to a lucrative market since they can fetch rates that are around thirty percent higher compared to a long-term rental. In addition, short-term lets also provide more flexibility with rental contracts and extensions.
Short-term letting refers to the process of renting out your property for a short period of time, usually from just a few days to up to six months. With a short-term let, you can charge a higher rental price to accommodate for any void periods. In general, the shorter the length of the tenancy, the more expensive it will be. Keep reading for some advantages and disadvantages of short term rentals from the UpperKey.
Best Type of Property for Short-Term Lets
If you are interested in investing in a short-term rental property, then most likely you will have tenants who are business professionals travelling to or within the UK, holidaymakers looking for somewhere to stay, or people who need temporary accommodation. The main factor to consider when choosing a property to rent out on a short-term basis is the location.
It is a good idea to choose a property that is located centrally within one of the UK’s major cities such as London, Edinburgh, or Manchester. The most popular short-term rental properties tend to be closely located to good public transport routes, shops, restaurants, and local amenities.
Pros of Short Term Lets
What are the advantages of short-term rentals?
For landlords, short-term letting gives you maximum flexibility, allowing you to choose the days, weeks, and months that you want to rent your property out for. There is likely to be less wear and tear on your property since tenants will be moving in and out more frequently. As a result, smaller issues can be spotted sooner before they turn into bigger problems.
Short-term lets can also be easily extended. For example, if you have a tenant who is in town doing business and need to stay a little bit longer to close an important deal, or your tenant is a family that needs somewhere to stay while their house is being renovated and it is taking longer than they expected, you can benefit from a longer rental period at a higher rental rate.
Things to Consider
When it comes to managing short-term rentals there are several different things to consider before you decide if it is the best option for you. If you want to earn your main income from short-term rentals or have several properties, then you may want to consider companies that manage short-term lets for you.
Property management for short-term rentals could include rental property management in Europe and the UK, a concierge service for Airbnb and seasonal rentals in tourist hot-spots, or key management for short term rentals depending on your properties and your needs.
Recent changes in the law in the UK mean that homeowners in London are now able to rent out their property for up to ninety days per calendar year without the need to get approval. However, you will need to apply for permission, which can be trickier, if you want to let your property out for longer. Along with this, you will also need to ensure that you have the right kind of insurance.
When choosing insurance, make sure that all of your bases are covered so that you are not left in a sticky situation if anything is broken, damaged, or stolen. You should also carefully check the terms and conditions of your mortgage or freehold lease as this might prohibit you from offering your property for a short-term rental.
Before deciding on the type of letting you offer, it’s important to check your details as this could cause big problems further down the line.
Finally, be prepared for vacant periods with your short-term let. While in an ideal scenario a new tenant will move in as the last one is moving out, this is rarely ever the case.
The Cons of Short Term Lets
While there are many advantages to short-term letting, there are also some downsides to consider.
It’s important to be realistic about what to expect from short-term letting and accept that it is not always about freedom and making more profit. In fact, you will usually need to be prepared to put in a lot more work compared to a long-term rental property.
Properties that are let for shorter periods of time tend to be offered fully-furnished with all utilities included, which can lead to more upfront costs for you as a landlord. It’s down to you to make sure that the property has all the required furnishings and that gas, electricity, internet, council tax, and the TV licence or TV streaming costs are paid for, so consider these expenses when you determine the rental price.
While short-term rentals do make it easier for you to spot problems with wear and tear earlier, there is also a bigger risk of wear and tear to be aware of since tenants will not always take great care of a property that they are staying in for a shorter period of time. Because of this, you may need to allow for more time and money when it comes to checking in and checking out, cleaning, and making any necessary repairs.
Finally, it’s important to be aware that short-term lets are quite uncertain, and it is not uncommon for your short-term rental property to stand vacant during the less popular seasons, which can damage your profits. This is one area where short term rental property management companies can prove useful.
Setting Up a Short-Term Let
If you have considered all the pros and cons and have decided that a short-term let is the right choice for you, then there are several things that you will need to do to get set up. The first thing to do is to double-check with your local council to ensure that short-term lets are allowed and if so, if there is a minimum rental period that you will need to adhere to when renting out the property.
Next, if you are looking to rent out your own home on a short-term basis, then you will need to check the terms and conditions of your mortgage to ensure that such an arrangement is allowed. If you have the go-ahead in both cases, the next step is to get adequate insurance that includes liability for any damages caused by tenants. It is also a good idea to get loss of rent or loss of income cover that will ensure you are financially protected in the event of the property being temporarily unavailable to rent for any reasons.
The final step is to prepare your property for renting out, making sure that it is compliant with all legal requirements for health and safety including all fire, electricity, and gas regulations.
Preparing Your Property for Rent
Once you have covered the basics, it’s time to get your property ready to advertise and rent out as a short-term let. You will usually need to purchase furnishings for your short-term rental.
With a short-term rental, it might be a better idea to get more furniture than you would usually provide in a long-term rental home that is furnished. This is because when tenants are only going to be staying in the property for a short period of time, they are unlikely to purchase accessories and smaller furnishings for it.
You will be expected to provide all white goods, main furniture items such as a sofa, bed, bedside tables, dining table and chairs, TV stands, coffee table, wardrobes, and storage furniture. Along with this, you should also get electronic accessories such as televisions, lamps, a microwave, kettle, and toaster at the very least.
When it comes to decorating the property, you can often get away with doing more than the neutral décor that is often recommended when renting out a long-term property since tenants who are looking for a short-term let will often be searching for a more home-from-home experience rather than something that they will be able to make their own over time.
However, that being said, bear in mind that with a short-term let you might be touching up the décor a bit more often, so it’s a good idea to keep it simple with colours and products that you can easily and cheaply replace. Finally, make sure that the property has working internet, gas, and electricity and that the council tax is up to date.
If you want to rent out a property, then you have the option to let it on either a short-term or long-term basis. Short-term lets are often more expensive than a long-term let so can be more profitable for landlords. Consider using a short let property management company to handle the day-to-day stuff, like key management and repairs.
Delegating Your Short Term Rental Property to a Management Company Like UpperKey
Now that you’ve learned all of the pros and cons of short term property rentals, you may wish to enjoy the benefits of renting your home for short lets without all of the hassle that comes along with managing reservations, listings, guest expectations and more. This is where an Airbbn concierge service like UpperKey steps in.
UpperKey offers full Airbnb property management in London and Airbnb concierge services in Paris. Not only do we remove all of the work related to hosting a vacation rental, but we air property owners a montly rent without them having to ilft a finger. Contact UpperKey today to learn how much extra rental income you could earn each month by entrusting your property to UpperKey and becoming part of a guaranteed rent scheme.