You’ve acquired a second property and generall the first question you ask yourself is, “Do I choose Short-term or Long-term letting?”
In general, people tend to rent out their additional properties on either a long-term or a short-term basis in order to monetize them.
We will look into what each of these approaches really means for you as an owner and what the advantages and disadvantages of each are.
What Is Short-Term Letting?
An example of a short-term letting would be a property that is rented for no more than 6 months at a time. It is mostly seen in holiday and self-catering accommodation where properties are being booked anywhere from a few days to a few months in advance.
What Are the Benefits of Short-Term Letting?
Income potential
Long-term letting has a limit on how much income you can earn, whereas short-term letting has no limit. pricing of long-term letting is exclusively determined by a monthly basis, while the price of short-term letting is determined by a weekly or daily basis and fluctuates throughout the year. It is ultimately down to the level of bookings that you receive that determines the success of your short-term rental.
Short-term lets can benefit from more significant tax benefits in comparison to long-term lets. Click here to read more information about this https://www.menaiholidays.co.uk/blog/a-guide-to-furnished-holiday-let-taxation/
Own usage
A lot of people who have second homes want to be able to enjoy their properties as well. Short-term letting provides that flexibility, it allows you to use the property as much or as little as you wish. The choice is always there. We recommend keeping some of our busiest months, including July, August, and December, available for booking, especially during the summer holidays.
Level of involvement
With short-term letting, your own usage allows you to keep an eye on your pride and joy. You can also use your own usage time to carry out essential maintenance and repairs to keep the property looking fresh.
With long-term letting, you are relying on the tenants to keep the property up to standard and report faults etc as they occur.
What Is Long-Term Letting?
Long-term lets are generally those that last 6 months or more and can typically last up to a year. It’s usually for one tenant/family for the duration of the contract. Long-term is used when people seek a permanent home.
What Are the Benefits of Long-Term Letting?
Guaranteed income
With long-term letting, you can ensure a consistent income, which can be difficult with short-term letting. Many people find it important to have the security of a guaranteed income, especially if they own a property and have a mortgage.
We can estimate how much money a short-term rental property will earn on average over a year; however, this is only an estimate, and it ultimately depends on bookings and availability.
Fewer costs
Long-term tenants typically cover all additional costs such as council tax, utility bills, and contents insurance. With short-term letting, you must cover this. As mentioned above, council tax relief can be claimed.
Less involvement
Both long-term and short-term will require your input. However, long-term should require less of your time. Your tenants will most likely take care of the upkeep of the property, you will just need to ensure all the health and safety compliance matters are dealt with as and when required.
In the short term you’re having to deal with constant changeovers and regular maintenance and repairs. However, at Menai Holidays we have management options that can arrange all of this for you!
Below we have summarised the main advantages and disadvantages of both approaches.
Please Note: The information contained in this article was accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time, so please contact our prospective new owner team if you’d like to hear how. Nothing in this article constitutes the giving of financial, tax or legal advice to you; please consult your own professional advisor (accountant, lawyer etc). in this regard. If we have referred within the article to a third-party provider of unregulated holiday let mortgages, this is due to the fact that such mortgages aren’t currently regulated by the FCA.
As a helpful reminder, your home may be repossessed if you do not keep up repayments on a mortgage, so again anything you decide to do in this particular area this is one on which you should take your own professional advice on too, as we aren’t providing and can’t provide you with this.
As a holiday letting owner you are responsible for compliance with health & safety laws, regulations and guidance, and for having suitable insurances in place (not Sykes Holiday Cottages or its brands). From time to time, Sykes shares information with you on the topic of health and safety and insurance. When it does so, it is not providing you with advice (legal, financial, tax or otherwise); please seek your own as you see fit. In addition, it is not making any representations or warranties about the information being complete or free from errors or inaccuracies. Sykes shall not be liable for any loss or damage arising under or in connection with your reliance on it.
