So, you’ve got a spare room and your friends have told you to list it on one of those portals, you know the ones. It’s a great way to make easy money, they tell you. Or perhaps you’re taking off on holiday and could do with the cash or maybe, you have a second property and are attracted by the lure of high rents.
Short term letting is a booming business at the moment, as a means of providing both tourist and domestic accommodation. In London, the boom is putting untold pressure on the availability of housing as well as the hotel industry and even Airbnb agree there’s a need to monitor and regulate.
So, should you jump on the bandwagon and make your buck or is it more trouble than it’s worth?
Let’s start with what a short let is?
A short let is generally considered to be anything less than 6 months and normally the rent includes utilities, TV and internet. The premises in question is also normally fully furnished and equipped, with bed linen provided. Beyond that, there’s a great deal of diversity. Your short let might be letting your spare room, letting your house while you’re away or letting your second property / buy to let property. It might mean letting for a day, a week or 5 months.
The main and obvious advantage is that tenants will normally pay more for short term lets. For example, lets of 3 months may earn you double the going rate of a 6-month tenancy and lets of a month or less, can earn even more. The rental transaction costs to landlords of using some of the popular portals are also usually lower than using a letting agent.
If you own your own place and are going away, a short term let in your absence can provide a great solution. Someone to water your plants, feed the cat and pay you rent while you relax and unwind. Or perhaps a lodger in your spare room a few nights a week may be enough to help make ends meet.
But don’t get carried away. For a start, don’t forget you’ll have other expenses to pay. For most short term lets, you’ll probably have to pay the council tax and water bill. If it’s a holiday let you may also have other services to cover like electricity and Wi-Fi.
Another key consideration is making sure your property is health and safety regulation compliant. That means risk assessments, gas and electricity inspections and appropriate fire precautions. In most circumstances you will need to ensure that you have a Energy Performance Certificate (EPC) and this requirement applies to holiday lets (if you let your property for more than 4 months in a year) and room rental if the room is self contained and has its own bathroom, toilet and kitchen. In short, check the regulations carefully to make sure you comply.
You also have to consider the demands of a high turnover of tenants. That’s cleaning, marketing and managing your property in between tenants. And the chances are you won’t have much opportunity to vet them. Ask anyone who has let property on short term lets and you’ll probably find they’ve had mixed experiences: some tenants leaving their property spotless, others leaving it in an absolute tip. And there’s not much you can do about that if they do.
There’s also the day to day management of the let and the state of your accommodation. Short term tenants have high expectations of your property and if something goes wrong, they usually expect it to be dealt with within the day. Not much fun, if you’re on holiday the other side of the world or caught up in your working day.
Finally, as the owner of a property with a mortgage to pay, the big problem with short term lets is that you face a very real risk of long periods when your property is empty.
Don’t forget the legalities
There are of course always the legalities you need to comply with as well. In London, you cannot let your property on a short let for more than 90 days a year. Wherever you are, you should always check with your lender if you have a mortgage, whether that’s a buy to let mortgage or not, to see what the terms are about letting. And don’t forget you’ll need appropriate insurance, then there’s the tax implications of extra income and the question of whether you’ll need an accountant.
You should also check with your local council and if you’re a leaseholder, check the terms of the lease. After all, if you fail to comply with the legal requirements, those attractive rents will be eaten up very quickly if something goes wrong.
Is short term letting for you?
Short term letting has been revolutionised by the likes of Airbnb, and although controversial, short lets are here to stay. Whether it’s right for you will remain a personal choice depending on your particular circumstances but don’t just get caught by the pull of high rents. Make sure you consider all the implications and take appropriate advice from a professional before you jump on the bandwagon.
Graham Faulkner is Branch Director of EweMove Dorking and he’s also a portfolio landlord, as well as specialising in helping other landlords. Apart from his own experience and expertise, he can also recommend the right professionals, as tried and tested by him, to advise you.
Multi award winning EweMove in Dorking is a residential property sales and lettings agency who pride themselves on being refreshingly different and standing out from the crowd. EweMove Dorking covers from Ockley to Oxshott.
Enquiries to 01306 406 506 / 01372 701 702, or via email to email@example.com