Tenancy durations are a hot topic, research from London Councils suggests 1 in every 50 homes in the capital is let on a short-term basis raising fresh concerns about the impact on London’s property market.
Though this may be accurate, there is still a place for short-term tenancies in today’s housing market. They are not right for everyone, but can be an ideal solution for certain types of tenant. Let’s take a look at exactly what a short let is and who can benefit from them.
What is a short-term let?
Although the name seems to speak for itself, the timeframe for a tenancy to meet the definition of a ‘short-term let’ is actually quite specific.
Generally speaking, if a rental property is offered to the market for anything up to 6 months, it is defined as a short-term tenancy. If the rental property is offered for anything from 6-12 months, it is usually marketed as a medium-term rental. Anything over a year is considered a long-term let.
In real terms, short-term lets are quite rare. As such, anyone looking to rent a property for a shorter period is likely to face a lot of competition for the tenancy.
Who uses short-term lets?
There are all sorts of reasons why a person may prefer a short-term let over a more long-term commitment. Some may only be wishing to stay in the area for a few months because of their work, while others may be in need of temporary accommodation whilst they wait for a property purchase to complete.
One thing that is becoming increasingly common is for people to take out a short-term rental whilst extensive renovation work is carried out on their existing property. A growing number of people are having major renovation work done on their homes, often causing them to be without a working kitchen or bathroom for extended periods. Renting a property for the period while the work is carried out can be the perfect solution, and far less expensive than staying in a hotel.
Having mentioned hotels, it’s worth noting that tourism is also a driving factor of the short-term rentals market of today. Anyone staying in the country for more than a fortnight will probably save money by taking out a short let rather than staying in a hotel. This is particularly true in expensive areas like London, and short-term rentals are emerging as a preferred option for these types of tourists.
What are the advantages of short lets?
When you take a look at who typically takes on a short stay rental, the advantages of this sector of the market for certain tenants becomes quite clear. Although they are usually more expensive than longer-term tenancies, short lets are a wise financial option for many situations. They also provide a certain amount of flexibility for people who are only staying in an area for a short time.
In addition to this, tenants find that a short-term rental offers more privacy and living space than the vast majority of hotels. You will also feel more comfortable than you would be living in a bland, sterile hotel room. These factors can be very important to people, particularly when they want a place to entertain friends, family and work colleagues as well as a place to sleep.
Are there advantages for landlords?
With so many benefits for the right type of tenant, what are the advantages for landlords of offering short-term lets? The short answer is that, just like the tenants they are hoping to attract, some landlords may prefer a short-term solution.
The flexibility of short lets works both ways. Some landlords may wish to sell a property, but not immediately. Naturally, they have the option of leaving that property empty, but this doesn’t make the most sense financially. The solution is to offer the property as a short-term let.
Taking on a tenant for a short time enables a landlord to take stock of their own financial situation and the way the market is performing. Should they need to sell a property, it is preferable to have a short-term tenant as opposed to having to wait for a longer tenancy to reach its end.
London is the perfect city for landlords looking for short-term tenants, because there is a lot of demand. This brings the luxury of having a large number of potential tenants to choose from, so landlords can afford to be discerning about who occupies their property. Should something not go to plan with the tenancy, a short-term let means a new tenant can be brought in relatively quickly with little fuss.
However, one thing to note is that there is legislation in place that prevents homeowners in London from offering short-term rentals on their entire property for more than 3 months in the year. If you wish to offer your home for more than 90 days on a short-term let, it may be necessary to apply to your local authority for a Material Change of Use.