Are long term lets more profitable for landlords than Airbnb?
If there’s one thing all landlords want, it’s to maximise the profits from their investment properties. For a long time, this meant long term rental. Landlords would get tenants in for year-long contracts and many would stay for even longer.
In recent years, however, things have started to change. The introduction of stricter tax regulations leads a lot of landlords to look for alternatives, with many switching to short-term rentals as a way to boost their income.
So, are short term rentals more profitable than long term lets? We decided to find out.
Short term vs long term lets
Tenants staying in a property on a short term basis generally have to pay a higher rate for their accommodation than renters on long-term lets.
As a result, landlords that can attract high numbers of short-term renters to their properties can make a better return than those with long-term tenants. However, this profitability depends heavily on demand.
If a property is in a bad location, or if there is an oversupply of short term housing in the area, its profitability may well be reduced. Another risk of short term lets is increased wear and tear on a property.
People renting homes for a weekend are less likely to take adequate care of a property and may even use it as a base for parties. This can result in significant damage to the property.
Short term lets in Cambridge
While short term rentals may be more profitable in some parts of the country, in Cambridge, Airbnb rentals bring in a surprisingly small income.
According to research published by Invest for Property, Cambridge is one of the least profitable cities in the UK for short term lets. The average rental annual income in the city is just £3,744, a considerable 35% below the average of £5,772 from the cities surveyed.
Short term lets and Covid-19
In recent months, the short term rental market has been heavily impacted by the Covid-19 pandemic. This has largely affected properties marketed as holiday rentals.
According to @Landlord_Today, “Since 13 March, when the first effects in the UK were felt, most companies have seen more than 70% of their reservations cancelled, with some losing over 90%.”
This has had a significant impact on the profits landlords are seeing from their rented properties and is something likely to affect the short term rental industry for months and possibly even years, to come.
Checked Inn and short term lets
While the number of short, holiday-style lets may be down, medium-term rentals are more resilient in the current economic climate. People travelling for work or study need safe, hygienic accommodation more than ever.
As a result, many are booking self-contained apartments in their destination cities. This could be a good option for landlords in Cambridge looking to maximise their profits.
A lot of people come to the city to take up short-term contracts and to study at the world-famous university and so medium-term lets are always in high demand.
Find out more and learn about the properties we offer, by exploring our site or getting in touch with a member of our team.