Are you thinking of renting out your property this year?
When deciding how to let your property, the length of the rental agreement is a key consideration. In this comprehensive comparison of long-term, mid-term, and short-term lets, we will examine the unique advantages and disadvantages of each. This should help you make a more informed decision for your investment property(s).
This guide aims to help you determine the ideal rental term for your investment property to match your needs and situation. Whether you’re looking for stability from a long-term let, flexibility from a short-term let, or high yields, read on to learn more about short term rentals, mid-term rentals, and long-term lets, as well as the legal requirements for each type of tenancy agreement.
Long-term: typically 1 year or more
Long-term lets of 1 year or more offer stability and peace of mind for both parties, although they limit flexibility. Tenants enjoy the feeling of having a long-term home, and landlords benefit from guaranteed rental income and high occupancy rates for long periods. However, lengthy commitments mean less ability to react to changing circumstances, which for some landlords is an important consideration for maintaining a steady income.
Mid-term: 3-8 months
Mid-term lets of 3-8 months bridge the gap between long and short lets. For tenants, they provide more flexibility than year-long contracts if life plans are uncertain. They are often used by contractors looking for short-term rentals for travelling professionals but can also apply to student lets. With mid-term lets, landlords can change tenants more regularly to maximise rental yields, but more frequent turnover means additional costs within a couple of weeks.
Short-term: less than 6 months, often nightly or weekly
Short-term lets of under 6 months provide extreme flexibility and are ideal for landlords who wish to frequently re-let properties and maximise rental income through platforms like Upperkey. There are advantages to short-term lets, but this type of rental model does come with additional work and costs.
Comparison Tables
Long-term lets | |||
Pros | Cons | ||
Stable, guaranteed income | Long leases ensure a stable and predictable rental income stream. | Lack of flexibility | Long leases mean landlords cannot increase rents or terminate agreements quickly to reflect market changes. |
Lower voids/vacancies | Longer tenancies mean lower periods where the property is empty and not generating income. | Risk of getting stuck with problem tenants | Difficult tenants are harder to remove in long lets. |
Less turnover costs | With less frequent changeovers, costs are lower for advertising, referencing, cleaning, and maintenance between tenants. | Lower rental yields | Long-term tenants expect stability and discounted rents, reducing potential income. |
Medium-term lets | |||
Pros | Cons | ||
More flexibility than long-term lets | Medium-term leases allow landlords to increase rents or change tenants more frequently than longer leases. | Less predictable than long-term | Income is less secure than with year-long tenants. |
Lower voids/vacancies compared to short-term lets | The 3-8 month term limits vacant periods between tenants compared to very short lets. | Higher tenant turnover | Dealing with more frequent tenant changeovers can be time-consuming. |
Ideal for some tenants | Tenants like students or those on temporary job assignments may prefer medium-term leases. | Lower rents than short-term | Nightly/weekly short-term rents are often higher than monthly medium-term rents. |
Short-term lets | |||
Pros | Cons | ||
Flexibility | Short-term lets allow landlords to be flexible. This is useful for landlords letting out a holiday home they may wish to use for some of the year. | More void periods | Landlords may experience gaps between short-term lets when the property is empty and not collecting rent. |
Higher rental yields | Landlords can charge higher rents and maximise income by frequently turning over short-term tenants. Popular tourist areas allow very high yields. | Higher turnover costs | More frequent turnover leads to higher costs for things like cleaning, marketing, and tenant screenings. |
Low commitment | Short-term leases require less commitment from both parties. Tenants aren't locked in long-term, and landlords can frequently change tenants. | More wear & tear | Some short-term tenants may disrespect the property more since they know it's temporary. |
Short Term Rentals Vs Long Term Rentals Vs Mid Term Rentals
Long-Term Lets
For landlords looking for a guaranteed income for 12+ months, long-term lets are ideal. Many tenants are looking for a secure long-term let, so it can often be easier to find tenants, especially in an area where demand outstrips supply. In popular cities like London, Tokyo, Sydney, and Vienna, for example, the average rent was £2,086 in May. Rents in the capital increased by 6.9% in the 12 months leading up to January 2024, the joint-highest annual change since 2006.
With a long-term let, you will have lower void periods. Once you have a reliable tenant, they may end up staying for several years, which reduces the level of management needed. In turn, this reduces management costs because you don’t need to worry about things like marketing or cleaning until the lease ends.
One of the major disadvantages for landlords looking at the long-term let model, such as long term furnished rentals, is the lack of flexibility. While it is possible to give a tenant notice on an assured shorthold tenancy (AST), you must give them at least six months’ notice, and they are protected for the first six months of an AST. The process of evicting a tenant can be long, and landlords must adhere to the current rules and regulations or face various penalties.
The risk of being stuck with a nightmare tenant is real. Tenant screening should weed out problem tenants, but it isn’t a foolproof strategy. If a tenant causes problems, it can take up to two months to evict them using a Section 21 notice. It may even take longer if they fight the process.
Another disadvantage of long-term tenancies like long term Airbnb rentals is that rents are typically lower.
Short-Term Lets
Platforms like Airbnb and Booking.com are designed for short-term furnished rentals in popular cities like London, Paris, and Dubai. These types of rentals, also known as short-term lets or accommodations, are a popular choice for travelers looking for a home away from home. They often come with a range of amenities and facilities, such as cleaning and housekeeping, provided within the terms of the tenancy.
The Association of Serviced Apartment Providers (ASAP) maintains standards and a code of practice with which accredited members agree to comply, ensuring a high-quality experience for guests. Anyone can set up a profile on Airbnb and use it to let out a spare room or a second property. You can either handle the management yourself or hand over responsibility to a management agent like UpperKey. We will take care of the day-to-day management and pay you a guaranteed rent in popular cities like Berlin.
There are many benefits to short-term lets, including flexibility for the property owner. This allows for the possibility of using the space for a family holiday during the summer, as the owner can block out dates in their calendar. Short-term lets can also be very profitable, but it's important to note that some cities have regulations, such as the London 90-Day rule, which limits the number of days a property can be listed on Airbnb.
The downsides of short term rentals London and other cities is that there is more wear and tear on the property. Costs can be higher, too, with more cleaning required, and potentially more void periods. Short-term landlords must be prepared to spend more time managing an Airbnb compared to letting to a long-term tenant.
Additionally, there may be a high turnover of guests, which can lead to additional costs for repairs and utility bills, including TV licence. You may wish to consider long-term vacation rentals instead, where tenants pay for an extended stay, and Airbnb long-term rentals offer some advantages for landlords. However, short term let options can also be beneficial for landlords, as they can generate higher rental income and have a lower risk of wear and tear on the property's amenities.
Mid-Term Lets
Mid-term lets fall somewhere in the middle between short-term and long-term lets. This type of tenancy is popular with contractors in an area for a fixed term, as well as students looking to rent a room or property for nine months or so.
Mid-term rentals offer greater flexibility than long-term rentals, as well as a guaranteed income for the duration of the tenancy. This means fewer voids.
If you want to target a nice market like contractors or students, mid-term tenancies are an attractive option, but be prepared to accept lower rents for longer tenancies and higher turnover than long-term rentals Airbnb or similar.
Upperkey's Solution
UpperKey makes managing a rental property a breeze. When you use our full property management services, UpperKey becomes the primary tenant, which guarantees your rent. This secures your investment, leaving you to enjoy full market returns without the hassle of day-to-day property management headaches.
We offer all-inclusive packages for London short term rentals, Airbnb long term rentals, and everything in between. If you are considering short term rentals vs long term rentals, let UpperKey optimise your returns with our serviced accommdations management services.
We’ll take care of the housekeeping, check-ins, and all aspects of property management. We’ll even pay up to 12 months rent in advance – with no on-boarding fees!
Conclusion
There are many pros and cons of short term rentals vs long term rentals, so it is vital to think carefully about what you need from your investment in terms of flexibility and returns. For some landlords, short-term rentals are ideal because they offer greater flexibility at a higher price point, but be prepared to work harder for your money unless you take advantage of UpperKey’s property management solutions.
Long-term rentals can be advantageous if you don’t need the flexibility, but rental income is lower and there are many regulations landlords must adhere to.
Contact UpperKey to learn more about our property management solutions.
FAQs:
What are the different types of apartment leases available?
There are several types of apartment leases available, including fixed-term leases, month-to-month leases, and subleases. Fixed-term leases typically last for a set period of time, such as one year, while month-to-month leases renew automatically each month. Subleases involve a tenant renting out their apartment to another person for a specific period of time. Each type of lease has its own advantages and disadvantages, so it's important to carefully consider which option works best for your situation.
What are the different types of apartment leases available?
Apartment leases can vary in types, including fixed-term leases, month-to-month leases, and subleases. Fixed-term leases have a set duration, while month-to-month leases renew each month. Subleases involve renting from the primary tenant rather than the landlord directly.
What is short and long term rent?
Short term rent is a rental agreement for a short period of time, usually less than 6 months, while long term rent is for 6 months or longer.
What is the difference between long and short leasehold?
Long leasehold means renting a property out for one year or more, while short leasehold is renting it for less than a year.
What is the disadvantage of a short term lease?
Regulatory changes like the London 90-Day rule limit the number of days you can rent on platforms like Airbnb.
How short is a short term rental?
A short-term rental can be for as little as one night.
Is rent a short or long-term liability?
Rent is income, therefore an asset not a liability.
What is the best lease length for an apartment?
The best lease depends on your current needs.
What is meant by long term rent?
Long term rent is rental income over 12 months or longer.
What does Airbnb consider a long term stay?
Airbnb considers a long term stay to be 28 days or longer.
Is Airbnb cheaper if you stay longer?
Airbnb landlords typically offer discounted rates for guests who stay longer.
Comments