Short-term vs. long-term rentals: Which offers better returns?
With rising landlord costs, some property owners are switching from long-term rentals to short-term lets. While short-term rentals can seem more lucrative at first glance, there are several key factors to consider when determining which option will deliver the best investment returns.
Location is key
The success of a rental strategy often depends on the property’s location.
Short-term lets tend to perform best in city centres or holiday hotspots where visitors need convenient access to transport links, business hubs, and attractions.
In contrast, properties in quieter towns or rural areas may struggle to generate enough short-term demand to remain profitable.
A local letting agent can advise on what type of accommodation is most in demand in your area and which rental strategy is likely to suit your property best.
Rental income
Short-term lets generally achieve higher rent per night due to their flexibility and convenience. Peak seasons can also command premium rates, especially in tourist destinations or during major events.
However, long-term lets offer consistent monthly income and the added security of stable tenancies.
For the best long-term returns, factor in both rental income and property value growth when assessing your investment.
Occupancy rates and voids
Short-term lets often experience fluctuating occupancy rates, which can leave your property vacant for extended periods.
Long-term lets typically provide more stability, with fewer void periods and reliable income – ideal if you rely on rental earnings to cover mortgage payments or living costs.
Property management
Managing a short-term let requires more time and effort due to frequent tenant turnover, cleaning, and maintenance between stays. Whether you handle this yourself or hire a managing agent, expect higher costs than with a long-term let.
Furnishing and décor
Short-term lets must be fully equipped, from kitchenware to soft furnishings and entertainment systems. High-quality décor is also crucial to attract guests and secure premium rates.
Long-term lets, on the other hand, typically require fewer furnishings – often just basic furniture unless it’s an HMO.
Maintenance costs
Frequent tenant changeovers in short-term lets lead to increased wear and tear, more frequent cleaning, and ongoing repairs.
Long-term lets generally require less frequent maintenance, often limited to periodic redecoration.
Which option is right for you?
If you’re unsure which rental strategy suits your property best, our lettings experts are here to help. Contact your local Leaders branch for tailored advice and guidance on maximising your property’s potential.
Want to know more about the lettings services LRG can offer you? Follow the link below to submit an enquiry and quote that you’re an NRLA member to find out more about the exclusive discount* we can provide.
