Residential Let or Short Term Let – Which is the better option?
Both sides of this question have many pros and cons. In short, yes you should consider switching your current residential let property over to the short-term market. Why you may ask?
Below I have outlined a few Pros and Cons of both strategies for you to understand the thinking.
- More security over the monthly income amount
- Low day to day management
- VAT exempt income
- Long term security
- You cannot just reclaim your property back at any point. You must follow the correct legal procedure which can cost thousands
- Risk of void periods where you will receive no rental income
- High management costs for signing up new tenants. Tenant find fees, Deposit Protection Scheme fees etc.
- 1 bad tenant could result in a loss of over 1 years rental income, especially if the property requires repairing. These costs are often hard to reclaim, unless lesser than their deposit amount.
Short Term Let
- Considerable return on investment
- A potential retirement home
- You can claim your property back at any point
- Very few legislations that you must follow
- Airbnb backed insurance covering guest damage
- Beneficial tax arrangements
- Higher sales value if sold as a running business
- VAT applicable income
- Higher maintenance costs
- Highly intensive day to day management
- Higher property standards required to compete in such a strong market
- Risk of no income
Like any business, there is a risk of failure, which means that you have to carefully think about the option that suits your needs the most. You have to remember that not every property is suitable for the short let market. Carefully research the local area to see if there are any properties that have multiple reviews and getting regularly booked. By doing some basic market research, you will quickly see if there is a demand for your property.
If you are ever in doubt, Starbnb are always happy to assist and put you in the right direction. We believe that honesty is the right policy, therefore we will always give you our honest feedback.