With a rise in popularity of short term letting sites like Airbnb and Booking.com, here in the UK there has been a marked increase in the number of people letting their property to holiday makers and business travellers.
The demand for hotel alternatives has resulted in many people switching their long term let to the short term market with a promise of a higher income. Some people are even letting out a room in their house! In fact, anyone with a spare room or annexe can take advantage of those looking for a place to stay.
But for the average landlord, what are the disadvantages of swapping your long term rental property for a short term let?
Many property investors are swayed by the greater returns of letting out a property to business travellers or tourists given that the property is priced at daily rate. This could be around 30% or greater than the standard rental income. In addition, landlords can also find the higher degree of flexibility appealing, allowing them to keep their property vacant as and when it suits them. Finally, bad occupants don’t stay long!
So, what are the disadvantages – and do they outweigh the advantages?
Short term lets take a large amount of time and effort. With a continual flow of new guests, you’ll need to clean and prepare the property each time a tenant leaves as well as offering interim cleaning and housekeeping services for those who are staying more than just a few days. Think of it like a hotel – where guests need to be checked in and out and any needs catered for straight away during their stay. You’ll also be reviewed and negative reviews can result in fewer bookings so it’s important to get it right.
Any damage, wear and tear and maintenance will need to be factored in and with a higher guest turnover this will be higher than it is with a long term tenant. You will also need to consider any additional costs including utility bills, Internet, TV license, council tax – which are usually covered by the tenant in a long term let.
Finally, there are more likely to be void periods, which can be regular during the winter when there are fewer tourists visiting the city.
Short-term lets are significantly more demanding and unstable than traditional long-term lets and it’s important to consider the type of property you own and how it will match up to a hotel. Competition is high, so your property will need to stand out. You also need to be in a great location close to public transport and amenities that will appeal to travellers.
Here at Vanilla Square we believe that good management is key – having a company to handle everything from finding and vetting tenants to dealing with issues that arise can make a huge difference to your landlord experience. With a long term let you’ll have a steady and passive rental income that will, for the most part, provide positive cashflow and minimal effort week to week. As long as you do your due diligence and find great tenants you could find that the returns long term is greater. Long-term lets tend to be the preferred choice for landlords that want consistent rental income every month with the least amount of effort.
Vanilla Square – highly personal sales and lettings! Whether selling or letting property, you will always be liaising with one of our business partners, which makes our service that much more responsible and approachable. When you instruct us, your property will reach a wider audience as we are one of the few agents who are present on all the major property portals to offer sellers and landlords maximum exposure. If you’re looking to buy, sell, rent or lease your property, or you’re simply considering the idea, contact us by calling 0141 229 0210 or pop into our new office at 711 Great Western Road. One of our partners will be delighted to help and provide you with impartial, expert advice.