Shift from short term to long term lets
Pre corona-virus short term let landlords were contemplating the switch to long term rentals. The rise in sites such as Airbnb, Booking.com and Home & Away has made holiday lets a number one choice than hotels. It has also seen the rise in house parties, stag / hen parties staying and group bookings where it should only be a set number of guests. It has also seen a fall in long term properties being available for potential tenants as landlords see they can potentially make more money. Councils such as Edinburgh, Glasgow and certain Burgh’s around London have created legislation that means all short term owners will have to adhere to regulations and governance the same as long term landlords currently do. Like everything that’s new some people agree and some disagree.
The Coronavirus has affected all parts of the economy, including rentals, but tourism in particular has been hard hit. It meant that holiday lets came to a complete standstill during lock-down, whereas the traditional long-term lets have been far less affected.
Short lets, although they undoubtedly involve a lot more work, can achieve around 30% higher rates and yields than long-term lets, and they also have considerable tax advantages over the traditional letting; they are classed as a business as opposed to an investment income, for tax purposes. So it’s no surprise that as the Section 24 tax rules began to bite, many landlords switched to short-term holiday letting. The upshot is that many landlords are now looking to revert back.
Despite their undoubted financial advantages, given the right circumstances, holiday lets have their drawbacks as well, not least the amount of work involved in marketing and managing – there are strict HMRC tax rules to follow and rarely do they run at full capacity.
The key benefits of moving back to log-term lets are number one, a steady, regular income, and number two, a dramatic reduction in the amount of work needed to manage. No more marketing to fill the rental for days or weeks, several weeks in advance, no more weekly or fortnightly changeovers, no need to contemplate the cost and efforts needed for regular deep-cleans.
Let us know your thoughts and if this effects you in the comments below.