A new source of income and providing travellers with an affordable and comfortable alternative
As a landlord, you may contemplate short-letting your property for various reasons. You may want to generate additional income, or you may need to move temporarily due to work or personal matters. The term might seem self-explanatory, but short-term lets usually have to adhere to a specific timeframe to be considered as such.
Generally, a short-term tenancy is a rental property offered to the market for six months or less. Whatever your motivation, there are several factors to remember before deciding to short-let. One of the main advantages of short-letting is the flexibility it affords. Property owners can determine when their property is available for rent, allowing them to use it for personal purposes during off-peak periods or special occasions.
New income source
By renting out your otherwise vacant home, you can benefit from a new source of income and provide travellers with an affordable and comfortable alternative to hotels and hostels. Many people opt for short-let properties when they relocate for work. These relocations often occur quickly and in unfamiliar locations, so many choose a more temporary solution instead of making hasty decisions.
Some individuals also seek short lets while their own homes undergo construction work. They desire a comfortable place close to home to monitor their progress, yet they want to escape the dust and noise.
Attracting the right tenant
Short-letting is a way to generate extra income, but it’s crucial to understand what’s involved. For instance, if you plan to let your property temporarily, ensure you have adequate insurance. Additionally, consider that short-term tenants may cause additional wear and tear on your property.
Another factor to consider is the type of tenant you wish to attract. If you hope to let your property to holidaymakers, ensure it is in a favourable location and well-equipped for their needs. Conversely, your property must meet their requirements if you aim to rent to professionals or students.
Legal considerations and compliance
Before embarking on short-letting, it is crucial to understand the legal implications. Ensure your property complies with local regulations regarding short-term rentals. Some regions may have specific licensing requirements or restrictions on the duration and frequency of short lets. Insurance is another critical consideration. Standard homeowner policies often do not cover short-term rentals, so obtaining specialised insurance to protect against potential liabilities and damages is essential.
It is also worth noting that short-letting can be more costly than traditional long-term renting. Typically, you’ll need to pay higher insurance premiums, and additional expenses may be associated with marketing your property and dealing with tenants.
Enhancing property appeal
Invest in quality furnishings and amenities to maximise the appeal of your short-let property. Guests are likelier to leave positive reviews and return if they experience comfort and convenience. High-speed internet, modern appliances, and thoughtful touches like welcome baskets can distinguish your property from others.
Precise and accurate property descriptions and professional photographs are crucial in attracting potential tenants. To entice prospective guests, highlight nearby attractions, transportation links, and unique features.
Managing costs and responsibilities
While short-letting can be financially rewarding, it also comes with additional costs and responsibilities. Effective marketing, maintaining cleanliness standards, and promptly addressing tenant inquiries are key to successful short-letting. It also enables frequent inspections and maintenance. Regular tenant turnover offers more opportunities to ensure the property remains in excellent condition.
Additionally, consider the time and effort required to manage bookings, perform check-ins and check-outs, and handle any issues that may arise during a tenant’s stay. Employing a professional property management service can alleviate some of these responsibilities, albeit at an extra cost.
Understanding the financial benefits
Short-letting your property can be lucrative and flexible to generate additional income. You can maximise this opportunity by understanding the financial benefits, managing responsibilities effectively, and ensuring compliance with legal requirements.
Regarding your relationship with HM Revenue & Customs, the same common-sense rules apply to any other business.
Are you looking to fund your next investment property?
Please contact us for mortgage advice, further information, or assistance regarding short-letting your property. To find out how we can help, speak to our team today.
Please note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Please also note: this is a long term investment which you hope will generate rental income along the way and a profit when you sell the property, but bear in mind that if you need access to some cash, a property can take time to sell or remortgage. If house prices fall, you might not be able to sell for as much as you had hoped. You would have to make up the difference if the property sold for less than you owe – a risk that increases, the higher the percentage you borrow. If you sell for a profit, you may have to pay capital gains tax. Don’t forget that with a variable rate mortgage, your costs will rise if interest rates go up. This would eat into, or even wipe out, your income and profit. It is recommended that you also maintain access to emergency funds to cover your mortgage payments during ‘void periods’ that may arise whilst you have no tenant and the property is not let.
