Benefits of short-term lets
When purchasing an investment property, you may be wondering exactly which let agreement is best suited to maximise investment and profit margins. Often overlooked is the use of short-term lets. This type of agreement provides an impressive profit return and is less maintenance than your traditional long-term let agreement. Find out the potential benefits of short-term lets in our helpful guide.
What is a short-term let?
A short term let is simply a residential tenancy which is typically rented out for less than six months, and in which the rent is all inclusive of all utilities. Properties are expected to be fully furnished, with an equipped kitchen as well as bed linen. Short-term lets have been increasingly popular over the recent years as they offer a host of benefits for renters. Perks of short term lets include:
- Flexibility in their living arrangements
- Freedom to live in a new location they desire
- A short-term solution whilst they are on the property ladder
- Convenient for those on a temporary visa and are just living in the country for a short amount of time
Benefits of short-term lets for landlords
Due to the small length of the contract, landlords can charge higher prices for their short-term let property than they would a long-term let. Making short-term letting an incredibly lucrative business – especially if your property is in a sought-after location – some landlords are known to make one month’s worth of rent in one week! With short-term lets, there is minor hassle as you won’t need to fill out as much paperwork.
Whereas, long-term contracts are fixed and therefore you may not be able maximise the profits of rising rents.
Eligible for tax benefits
Your property may be eligible for certain tax reliefs if it complies criteria of being a furnished holiday accommodation letting (FHL):
- Your property is available for letting 210 days in the year
- Lets do not last more than 31 days
- Your property must be furnished
- The property must be in the UK, EU, or EEA areas
Though some short-term lets won’t be compliant with these tax benefits, you can find out more about tax relief eligibility here. If your property doesn’t qualify as an FHL than you may be eligible for other tax rebates such as:
- Mortgage Interest tax relief
- Business Rates relief
- Capital Gains tax relief and more.
Return on investment (ROI) on holiday lets
- Property locations – this is the most important decision you make. If your property is in a sought-after location where you can take advantage of tourism, you are more likely to have a better ROI.
- Property features – if you have desirable features in your property, this can make it a big seller. It is important to furnish your short-term let so that it is eligible for some tax benefits.
- Number of rooms – this can have a big factor on your ROI, as the more rooms you have, the more profit you are able to make from your letting.
- Pricing strategy – how you price your let is equally as important. One tip could be to charge more on the weekends when your property is more likely to be booked.
Short-term lets are more management intensive – but this problem is easily solved with help from SevenLiving. Our property management services eliminate lengthy tasks, such as managing listings, guest communication, changeovers and cleaning, as these details are taken care of by our team of experts. We handle all enquires and manage your short-term rental admin – from application to completion. We also help with other aspects, such as providing a 100% turn-key experience and facilitating a 24-hour-check-in.
To find out more, simply contact our helpful team today.