The Rise of Short-Term Lets
We now live in an age of convenience, immediate self-gratification and never-ending competition with bargain-hunting, app-downloading and free trials dominating today’s markets; the same also applies to property - in particular the Buy-to-Let sector. As with all B2C industries, attitudes and trends are morphing towards creating faster and easier user experiences; and for Buy-to-Let, the new kid on the block is the short-term let.
Whilst the majority of landlords have typically preferred the security of long-term lets, recent years have demonstrated a noticeable shift with tenants now favouring short-term lets, opening up new, and potentially highly lucrative, opportunities for the Buy-to-Let market.
What is a Short-Term Let?
Compared to long-term lets, where contracts tend to be for a 12-month (minimum) tenancy, short-term lets, as defined by Knight Frank, are ‘any residential tenancy of less than six months where utilities, television and internet are included in the rent.’
Property experts put the rising desirability of shorter lets largely down to today’s ‘transient and flexible world’, as well as the popularity of hotel alternatives and apps for savvy millennials looking for more affordable options whilst still enjoying the all-inclusive perks.
Types of Short-Term Tenants
There are a variety of reasons tenants may want to rent a property out for a short period; for instance, they may be a homeowner refurbishing their own property, looking for somewhere to stay in the interim; an aspiring buyer wanting to explore a particular area they’re unfamiliar with before committing; a buyer looking for a temporary home during the process of buying/selling their property; or a holidaymaker/business traveller.
Landlords who tend to let out their property short-term can range from those with a pied-à-terre wanting to make use of their home when they are not occupying it, to part-time, and full-time, landlords with properties in tourist hotspots wanting to take advantage of a new Buy-to-Let trend.
Quicker Application Process
Compared to traditional lets, the application for a short-term let is much faster and references are usually not needed as all of the rent is typically paid upfront. For those who are hastily in need of accommodation, a short-term let would be ideal, and can be used to bridge the gap when looking for a suitable long-term rental home.
Minimum Commitment, Maximum Flexibility
If a tenant is unsure how long they will need a property for, they can opt for the minimum number of days accepted and then request a longer stay when the time is up. Sites such as Airbnb and HomeAway have proven just how convenient and flexible short stays can be.
All Bills Paid For
Another perk of renting short-term is that all bills are catered for; this does mean that rents will be higher to factor in the costs of utilities but it will still be far cheaper than a hotel.
Privacy and More Space
Tenants renting an apartment or a house on a short-term basis will enjoy the privacy and space they would experience within their own home; proving to be a much better choice than paying a significant premium for a hotel andonly having the limited space of an en-suite bedroom.
Thinking of Becoming a Short-Stay Landlord?
If your property is vacant, or is soon to be vacant, it may be worth considering a short-term let; however, if it is your sole Buy-to-Let property or your only source of income, sticking with a traditional long-term agreement may be the best option for a reliable income until you have expanded your portfolio (especially if there is a mortgage to pay on the property).
The great thing about a short-term let is that you can charge up to a 50%+ premium on top of what you would normally charge due to the convenience and inclusive bills; however you will need to analyse your costs carefully and build them into the cost of rents accordingly, whilst also taking into consideration that the property may be vacant between tenancies.
Short-term lets sometimes also mean a more hands-on approach compared to a typical, long-term agreement. If something in the property needs urgent attention and the tenant will only be occupying the home for a few days, landlords are often expected to respond and attend the situation within the day of it occurring, as opposed to responding later on or comparing tradesman quotes for the best price. Where tenants find your property online, this is even more important, as reviews are today seen as the staple determinant when deciding on where to stay.
If you are seriously considering becoming a short-term lettings landlord (and you’ve never rented out your property before), it is also important to make sure your property is compliant with health and safety regulations, has had the necessary fire risk assessment carried out and has the right level of cover on the insurance policy. Furthermore, if you bought your property with a residential mortgage and are now deciding to rent it out part-time, it is important to check your mortgage will allow this, as many have restrictions on how long someone can rent the property for, if at all.
Mutual Benefits of Short-Term Lets
According to the Association of Residential Letting Agents (ARLA), there are now more tenants and landlords who are seeing the mutual benefits of short-term lets, with a quarter of landlords stating they are noticing a rise in enquiries for lets lasting 90 days or less.
Whether you’re a traditional landlord, an investor just starting out, or a homeowner looking for profitable ways to make the most out of your primary or second home, short-term lets are definitely worth considering. The most popular locations for short-term lets tend to be within around a one-mile radius of transport facilities, restaurants and bars, so bear these in mind when letting out your own property or purchasing a new one for Buy-to-Let purposes.
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