Should you consider letting out your property short term?
The short-term accommodation industry in the UK is growing fast, and sharing platforms like Airbnb are estimated to facilitate around £140 billion worth of transactions per year by 2025. Many landlords are now turning away from long-term lets to see if short-term letting is more lucrative, but it’s not without downsides.
The pros and cons of short term lets
There are two significant benefits to letting out your property short term:
- Increased rent. Short-term lets charge a significantly higher rent than if the same property was let out long-term. In some parts of the country, the monthly rate for an Airbnb property can be as much as 600% of the rent it would otherwise take. This might explain why a report by the Residential Landlords Association (RLA) found that at least 133,000 private landlords were moving from the private rented sector to short-term lets in 2017.
- Flexibility. Short-term lets will not tie you to one particular tenant for a long period of time and normal rental contracts do not apply, so anyone who is a nuisance is at least likely to not stay very long. You can also choose precisely when you wish to rent the property out, which is convenient if you only need to fill it between longer tenancies.
However, short-term lets also come with additional concerns:
- Unpredictable income. You will likely only make more money than a residential landlord if your property is occupied consistently and frequently. Periods of low demand could see your property empty and your income dwindling.
- Wear and tear. The constant turnover of different people moving in and out means you will not have the chance to get to know your tenants before handing over the keys. Unfortunately this means you will have to expect more damage to your fixtures and furniture, and your insurance will need to reflect this.
- Business rates. If your property is available to let for 140 days or more per year to tourists, it will be classed as self-catering accommodation and valued for business rates. If this is the case, you should check if you also qualify for small business rate relief.
- Local regulations. Check with your local council if there are particular regulations which apply to short-term lets, and whether or not you will require planning permission to change the use of your property. In London you may only use your property as a short-term let for up to 90 days a year, unless you are granted planning permission.
- Higher costs. In addition to furniture your guests will expect bedding, cutlery, appliances and more. This can add up to a significant amount of money without a guaranteed return.
For many people the short-term accommodation sector can bring a significant increase in rental income, but at the cost of extra work and additional risks. The sector has also been largely unregulated, leading to rogue landlords operating through the same apps and websites as legitimate people. This year, the Short Term Accommodation Association (STAA) is hoping to address that.
Accreditation for short-term lets
This month, a government-backed scheme will be launched to allow landlords of short-term lets to get accredited by STAA. This accreditation is the first of its kind in the world. Becoming STAA accredited involves an inspection of the property, after which the landlord or agency will be given an accreditation logo to put on their website or advert. Annual fees for the scheme will be between £100 and £200 for private landlords.
The STAA is hoping that this new initiative will help tenants choose a property with confidence, boosting the short-term let market in the UK whilst also preventing rogue landlords causing problems for tenants and communities.
Romain Coleman, your local landlord solicitors
If you are considering turning to short-term letting, contact Romain Coleman’s commercial property team today. We can help you decide on the best course of action and clarify your legal obligations. We can also help if you are having issues with current or previous tenants.
Romain Coleman only represents landlords, never tenants – so you know we will always be on your side.
If you have questions about any legal landlord concerns, call us today on 0208 520 4555 and see how we can help. You can also use our Quick Online Enquiry Form.