Short-term lets are very much a trend when it comes to real estate investing, and there is a good reason why. It has completely transformed the investment game because of the ROI. This also doesn’t need to be a new property, either. It can also be for a homeowner who is looking to rent out their home whilst they go on holiday. It could also be for investors who buy property just to rent it out as an AirBnB. 

In this guide, we’ll help you understand what short-term lets are, including how they are different from long-term rentals and highlighting both the benefits and the risks that are involved. 

What Is A Short-Term Let? 

A short-term let is furnished property that is rented out to a tenant for a short period, similar to how AirBnB works. Some tenancies can exceed a couple of months, but usually, these are designed for weekly periods. This can be for those going on a holiday, business travellers, contractors or even those who are in between moving houses. 

There are a number of platforms that rent out these properties, such as AirBnB, Booking.com and Vrbo. These platforms make it easy for people to book a property for a short period of time. Not just that, but it also makes it easy for the property owner as well. 

Short-term lets can include entire homes, private rooms, serviced apartments, log cabins and even converted spaces. All of which are great for a short break. 

How Are Short-Term Lets Different To Long Term? 

The key difference between the two is the length of stay. Additionally, the management style and legal framework will vary significantly. 

Flexibility and Control

A short-term let allows the owner to block off certain periods for their own personal use. Not to mention that the landlord can adjust the prices due to the demand. With a long-term rental, there is less flexibility as these leases are with legally binding tenancy agreements. That being said, there is a more secure rental yield from this type of property.  

High Income Rates

Another great benefit to these types of leases is that the rent can be significantly higher compared to a long-term rental. Especially in city centres or other high-demand areas. You can expect premium rates in areas where there are a lot of tourist attractions.

In the UK, cities such as Edinburgh, Manchester, and London are all great for real estate investors who are looking to use the property as a short-term rental. 

Reduce Exposure to Eviction Law

Something that is a major consideration with long-term rentals is the tenant eviction law. When a tenant is tied down to a long-term rental, they are forced to pay monthly rent. In some cases, the tenant may potentially disagree with paying the rent, or even not pay at all. This is when a landlord will need to follow a legal process to regain possession of the property. Typically, this would involve statutory notices, observing waiting periods, and potentially the need to go through court. 

The issue with the eviction proceedings can be expensive, time-consuming and overall, very stressful for the landlord. Due to this, the landlord could potentially go months without receiving any rental income while still covering mortgage payments and legal fees. 

Comparing these short-term lets, they act very differently. Guests will typically be considered as licensees rather than tenants. This means that they don’t have the same legal protection as a landlord for long-term rentals. Once the booking period ends, the guest doesn’t have the right to remain in the property. This will reduce the risk of prolonged disputes and complex eviction proceedings. 

Costs To Consider For A Short-Term Let

While the short-term lets are very lucrative, they also offer higher operational costs, especially when getting in new tenants. This includes;

• Platform service fees

• Professional cleaning and laundry services

• Utilities (usually included in the higher nightly rate) 

• Specialised short-term rental insurance 

• Ongoing maintenance and repairs

• Furnishings and interior upgrades

Short-term guests do expect hotel-level standards so maintaining this level of service is expensive. 

Why The Guest Experience Matters

Managing the guest experiences is of major importance with short-term lets. This is because reviews can influence occupancy rates and pricing power. This is why you need to encourage positive reviews, and to do this;

• You need to provide clear and prompt communication.

• Offer a smooth check-in and check-out process

• Maintain cleanliness

• Include thoughtful extras such as welcome packs for their arrival

• Respond to any issues that they are experiencing instantly

To Summarise

Short-term lets represent very dynamic and potentially rewarding segments of the property market. The returns can be great; however, management fees can be costly. Not to mention being highly demanding of time.