Deciding on whether to offer a short- or long-term let can be tricky, and your final decision will likely be made because of a number of factors. With this in mind, we decided to put together a quick outline of the pros and cons of both durations of rental. Let’s take a look.
A short-term let is generally considered to be one that lasts for less than a full year. These can be quite difficult to find as a tenant so you could find that a short-term let will attract a lot of attention quickly.
Short-term lets give landlords a lot of flexibility when it comes to who they choose to have in their property. This is great if your property is in an area where demand is outstripping supply as you will generally be able to take your pick of a bunch of prospective tenants. Should things not work out, or if the market takes an upward turn, switching tenants is also far easier with a short-term let.
Many landlords prefer to opt for stability, and short-term lets can be lacking in this regard. Again, a lot will depend on the current state of the market in your area, but some landlords say that short-term lets just don’t have the security that they are looking for, especially those who operate on very thin margins.
A long-term let will usually be anywhere from a year upward. While they may lack the flexibility of a short-term let, they do perform better in a number of ways.
Long-term lets offer landlords a way to set-and-forget their agreements to a large extent. Once a tenant is in their property it usually just boils down to collecting the money whenever the rent is due.
This stability is attractive to many landlords, especially those who have multiple properties and want to keep the juggling that they have to do to a minimum. It also allows those with buy-to-let mortgages to calculate their ROI more accurately, as their income will be all but guaranteed for the duration of the tenancy.
As one would expect, the cons of a long-term let pretty much mirror the advantages of a short-term rental. Offering longer terms to tenants means that an element of rigidity enters into the equation, tying you in to what could prove to be a problem tenant or prevent you from taking advantage of increasing rental prices in your area.
There are, however, steps that you can take to build get-out clauses into your contracts if you so wish. Your solicitor will be able to advise you on the best course of action if this is a route that you would like to go down.
Whether you opt for a long- or short-term let will largely come down to your own individual circumstances and preferences. Knowing what you want to get from your buy-to-let business will allow you to make the right decision on whether stability or flexibility are the most important aspects of your investment portfolio.
If you enjoyed this post you might also be interested in Will the Buy-To-Let Market Still be Successful in 2016 and How Amateur Investors are Using Their Buy-To-Let Investments.