The debate over short-term lets vs long-term rentals has become a key consideration for UK property investors aiming to maximise their returns in 2025. Both strategies offer unique opportunities and challenges, and choosing the right path can greatly influence profitability, risk, and overall management style.
Short-term lets, often associated with platforms like Airbnb, appeal to holidaymakers and business travellers seeking flexibility and convenience. On the other hand, long-term rentals attract tenants who value stability, offering landlords a steady and predictable income stream. With changing market conditions, shifting regulations, and evolving tenant preferences in 2025, the question of which option is more profitable has never been more relevant.
In this blog, we will explore the financial returns, costs, risks, and legal aspects of both short-term and long-term rental strategies.
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What Are Short-Term Lets in the UK?
Short-term lets are rental arrangements where a property is rented out for a few nights, weeks, or even a couple of months at a time, rather than through an extended tenancy agreement. In the UK, this model has become popular because of platforms like Airbnb, Vrbo, and Booking.com, which connect property owners with holidaymakers, business travellers, and students looking for temporary accommodation. We also help property owners maximise their returns through our Rental Services.
These rentals are often fully furnished and include utilities, making them attractive to guests who value flexibility and convenience. Landlords benefit from the ability to charge higher nightly rates compared to long-term rentals, especially in tourist hotspots and major cities. However, income from short-term lets can be seasonal, with higher demand during holidays, events, or peak travel periods.
Who Is Short-Term Letting Suited For?
- Landlords with properties in tourist hotspots, city centres, or coastal towns.
- Investors looking for higher income potential through nightly or weekly rates.
- Owners who want flexibility to use the property themselves when not let out.
- Landlords willing to manage frequent guest turnover, cleaning, and bookings.
- Those prepared to hire a management company to handle operations.
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What Are Long-Term Rentals in the UK?
Long-term rentals refer to letting out a property to tenants for an extended period, usually six months or more, under a formal tenancy agreement such as an Assured Shorthold Tenancy (AST). This arrangement provides tenants with stability and security while offering landlords a reliable and predictable stream of rental income.
In the UK, long-term rentals are particularly attractive to families, working professionals, and students who prefer the certainty of a fixed home. Unlike short-term lets, tenants are typically responsible for paying their own utility bills, which reduces day-to-day costs for landlords.
The key advantage of long-term rentals lies in consistency. Landlords face fewer void periods, less frequent tenant turnover, and reduced management demands compared to short-term letting.
Who Is Long-Term Letting Suited For?
- Landlords who prefer consistent and predictable rental income.
- Investors seeking a hands-off approach with lower management demands.
- Owners of properties in residential areas, commuter towns, or cities with steady housing demand.
- First-time landlords who want a simpler, more secure investment option.
- Those looking to reduce operating costs, as tenants usually cover their own utilities.
Pros of Short-Term Letting in the UK
Higher Rental Income
- Landlords can charge higher nightly or weekly rates and adjust prices in line with the rental market. This often results in greater income compared to long-term lets, particularly in high-demand areas.
Flexibility for Landlords
- Short-term agreements make it easier to part ways with tenants if issues arise. Landlords are not tied down by long contracts, reducing the risk of being stuck with troublesome tenants.
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Convenience for Tenants
- Tenants looking for quick accommodation are more likely to choose short-term lets. Some may even extend their stay into a longer arrangement, often with less negotiation compared to long-term contracts.
Lower Exit Costs for Tenants
- Tenants can leave more easily compared to long-term agreements. This flexibility makes short-term rentals attractive for those with uncertain plans.
Cons of Short-Term Letting in the UK
Risk of Vacancies
- Short-term lets require a constant flow of tenants, which can lead to empty periods and inconsistent income. Seasonal demand can make cash flow unpredictable.
Higher Operating Costs
- Short-term tenants often expect fully furnished properties with utilities, internet, and additional amenities included. These costs fall on landlords, reducing overall profits.
Increased Time and Effort
- With frequent tenant turnover, landlords must manage multiple agreements, check-ins, and check-outs. This requires more time and effort compared to long-term rentals, unless a management company is hired.
Pros of Long-Term Letting in the UK
Stable and Predictable Income
- Long-term rentals provide landlords with a consistent stream of income, reducing the uncertainty that often comes with short-term lets.
Lower Void Periods
- With tenants staying for six months or more, landlords face fewer gaps between lets, ensuring steadier cash flow.
Reduced Management Effort
- Longer tenancies mean fewer contracts, check-ins, and check-outs. This makes long-term letting far less time-intensive for landlords.
Lower Running Costs
- In most long-term agreements, tenants cover their own utilities, internet, and other bills, which significantly reduces expenses for landlords.
Stronger Tenant Relationships
- Building rapport with long-term tenants can lead to smoother arrangements, less property damage, and fewer disputes.
Cons of Long-Term Letting in the UK
Lower Income Potential
- Monthly rental fees in long-term lets are usually lower than the combined returns possible with short-term nightly or weekly rates, especially in prime locations.
Less Flexibility
- Once a tenancy agreement is signed, landlords cannot easily change terms, raise rents, or regain possession until the agreement ends.
Risk of Problem Tenants
- While turnover is lower, problem tenants can still cause issues such as late payments, property damage, or disputes, and eviction processes may take time.
Limited Market Responsiveness
- Landlords cannot quickly adjust rent to match rising market rates during an active tenancy, potentially missing out on higher earnings.
Harder to Access the Property
- Unlike short-term lets, landlords cannot use the property for personal reasons while it is under a tenancy agreement.
Comparison of Short-Term and Long-Term Letting in the UK
Factor | Short-Term Lets | Long-Term Rentals |
Earning Potential | Higher income through nightly/weekly rates, especially in tourist areas. | Steady monthly rent, generally lower than short-term yields. |
Occupancy Rates | Seasonal demand with possible vacant periods. | More stable occupancy with tenants staying 6+ months. |
Location Factor | Best suited for city centres, tourist hotspots, and holiday destinations. | Works well in residential areas, commuter towns, and cities with housing demand. |
Costs | Higher expenses for furnishing, utilities, cleaning, and platform fees. | Lower running costs, as tenants usually pay utilities and maintain the property. |
Management Effort | Requires frequent check-ins, cleaning, and guest turnover. | Less day-to-day involvement with longer tenancy agreements. |
Market Trends 2025 | Growing demand but stricter regulations (e.g., London’s 90-day rule). | High demand due to UK housing shortage, offering secure long-term returns. |
Which Is Better: Short-Term Lets or Long-Term Rentals investment in the UK?
The choice between short-term lets vs long-term rentals ultimately depends on your investment goals, property location, and how involved you want to be as a landlord.
- Short-term lets are better suited for landlords seeking higher income potential and flexibility, particularly if their property is located in a tourist hotspot or busy city centre. However, they demand more time, management, and often come with additional costs and regulatory restrictions.
- Long-term rentals, on the other hand, are ideal for investors who prioritise stability, lower running costs, and minimal day-to-day involvement. They may not generate the same income peaks, but they provide consistent cash flow and fewer risks.
If your priority is maximising profit and you are prepared for active management, short-term lets may be the stronger choice. But if you prefer reliable returns with less effort, long-term rentals are often the safer and more sustainable option in the UK property market.
Maximise Your Property Investment with NeonLock
Choosing between short-term and long-term letting ultimately depends on your financial goals, lifestyle, and risk appetite. Both strategies have their unique advantages, but the key lies in selecting the one that aligns with your investment vision.
At NeonLock, we guide you through every step of your property investment journey from market insights to tailored letting strategies, ensuring you achieve the returns you deserve.
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Frequently Asked Questions
Q: What is the difference between short-term lets and long-term rentals in the UK?
Short-term lets are rented for days or weeks, often to holidaymakers or business travellers, while long-term rentals usually involve tenancy agreements lasting six months or more, offering greater stability for landlords and tenants.
Q: Are short-term lets more profitable than long-term rentals in the UK?
Short-term lets can generate higher income in popular tourist or business areas, but they come with higher running costs, management effort, and seasonal demand compared to long-term rentals.
Q: Do landlords pay more tax on short-term rentals in the UK?
Yes, short-term lets are usually subject to income tax and sometimes business rates rather than council tax, depending on the property’s usage and location. This can make tax obligations higher than for long-term rentals.
Q: What are the risks of short-term rentals in the UK?
Risks include seasonal vacancies, fluctuating demand, higher wear and tear, and stricter local council regulations compared to long-term rentals.
Q: Which UK cities are best for short-term lets in 2025?
London, Edinburgh, Manchester, and Birmingham remain strong markets for short-term lets in 2025, especially in areas with high tourism and business travel demand.
Q: When is a long-term rental strategy better for landlords?
Long-term rentals are better when landlords prefer consistent income, lower management hassle, and reduced risk of void periods.
Q: Can my landlord increase my rent by 50% in the UK?
A landlord cannot arbitrarily raise rent by 50%. Rent increases must follow the terms of the tenancy agreement or be deemed fair and reasonable under UK housing laws.
