Short Term Lets Vs Long Term Lets
23rd July 2018
If you are a landlord, perhaps you have been wondering whether short-term lets or long term lettings is most profitable and beneficial to you. With the increased interest in the holiday lettings market, we look at the advantages and disadvantages of both types of lets.
Short Term Lettings
The Holiday Let market has picked up dramatically over the last couple of years, with the likes of Airbnb making the short-term rental market a simple and cost-effective way of boosting your rental income. Research has shown that over 80% of landlords who invest in the sector with a holiday let do not live locally and therefore the need for a managing agent to handle this is greater. In addition with short-term rentals having a higher turnaround, mostly on weekends, landlords may decide that the responsibility of this falls on a managing agent.
- Commands an increased rent for a shorter period of time, meaning that you could rent out your apartment for a couple of weekends and would earn the same as you would from a month’s rent.
- There is no risk of rent arrears associated with the property, as guests make payment up front for using your property.
- Maintaining the property can be easily organised going in between guests and in low season.
- You will most likely avoid having to pay council tax as the property as it is a short term let, therefore, there are certain exemptions where council tax is not payable.
- There is 100% capital allowances on your first £250,000 of capital expenditure, as well as potential capital gains tax relief when you come to sell
- There are fewer safety regulations and licensing in place for short term lets
- It is most likely that a short-term let will require more effort and time in running a holiday let
- Unlike securing a 12-month tenancy, you are at risk of not having a guaranteed income or regular bookings.
- Void periods would most likely increase which pose other risks such as security and damage.
- Insurance costs on a holiday let are usually higher than a long term let
- Additional costs such as laundry/bedding, cleaning and the purchasing of items not usually provided with a long-term tenancy (e.g. cutlery/crockery)
- You may have to handle the guests and complaints on a more frequent basis
- You are liable for utilities such as electricity, gas, water, wifi and satellite TV, where usage may be higher in holiday lets
Long Term Lettings
- Once your property has been let you would receive a steady income, with a regular amount being paid to you, which tends to be preferred among those landlords with mortgages.
- There tends to be less demand from tenants in a long-term tenancy and would require less involvement on your side.
- Fewer void periods, due to required notice periods etc, which means you or your agent has more time to re-let the property with minimum turnaround time.
- Less wear and tear, long-term tenants tend to take care of the home and more likely to report issues during tenancy like leaks etc.
- Consistent rent and would not fluctuate according to time of year, unlike off-peak and on peak seasons with holiday lets
- Can be let for the full course of the year, with the tenants covering the cost of utilities such as council tax, electricity, gas, wifi and satellite TV.
- There is a higher risk of rent arrears, where you may have to follow legal proceedings to evict tenants.
- Your access to the property is much more limited, tenants have the right of quiet enjoyment so any visits must be booked in advance.
- There are more regulations to follow including being registered and licensed under the Rent Smart Wales scheme.
- For the lettings industry, there has been an increase in the amount of legislation in the private residential sector and more restrictive tax benefits, including capital gains tax.
In summary, regardless of which avenue you choose, your rental potential can be maximised with both short term and long term lettings via our Property Management service. If you are unsure of what to do with your property, speak our specialist team at Seraph Property Management, as other factors such as location, season and type of property may impact your decision. For any property lettings, we use our sister company James Douglas Sales and Lettings.
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