Renting out your property can be a great way to generate income, but there are two main options to consider: taking a long-term tenant or using it as a holiday let. While holiday lets can be tempting due to the potential for higher rents, there are several financial benefits to taking a long-term tenant that you should consider.
One of the biggest advantages of taking a long-term tenant is the guaranteed income, especially in the current market with rental prices being so high. With a long-term lease, you will receive a fixed monthly rent payment, regardless of whether or not your property is occupied. This predictability makes it much easier to budget and plan for the future. With a holiday let, your income will be more variable, as it will depend on how often you are able to book guests.
Managing a holiday let can be time-consuming and expensive. Your property will need to be cleaned between guests, there’s multiple bookings and enquiries to deal a higher volume of people going through the property it is likely more maintenance issues will arise. You will also have the responsibility of paying the ever-increasing utility bills. With a long-term tenant, there is much less to do. You will typically only need to deal and pay for occasional repairs and maintenance, you won’t constantly be on the look-out for new guests and the occupants will take charge of the bills. Agencies in the field of traditional lettings, such as ourselves, are also more likely to have more experience than those in the holiday letting market, which is a fairly new concept.
Holiday lets tend to experience more wear and tear than properties with long-term tenants. This is because they are used by a variety of different people, who may not take the same care of the property as a long-term tenant would. With a long-term tenant, you are more likely to have a stable and responsible occupant who will treat your property with respect and cost you less. Any tenant we rent a property to is credit and reference checked and we will meet them before they move in. With a holiday let, you never know who will be staying in your property.
Properties with long-term tenants are generally seen as more stable and reliable investments than holiday lets. This means that they are more likely to appreciate in value over time. On the other hand, the value of a holiday let can be more volatile, as it can be affected by changes in the tourism industry.
There may be more tax efficiencies for private rental as opposed to Air Bnb, however you should liaise with your accountants or tax advisers to find out the financial implications of running a holiday let. For instance, did you know that if you are short-term letting your property for over 140 days per year you are subject to paying business rates?
In Liverpool, holiday lets are not exempt from selective licensing and you could receive a hefty fine if you fail to apply for one. We have come across Air BnB management companies operating in the City that are even unaware of the need for selective licencing. With 18 years in the business, we have the experience and knowledge to keep you and your investment within the law.
Overall, there are several compelling financial reasons to take a long-term tenant rather than a holiday let. While holiday lets can be tempting due to the potential for higher rents, the guaranteed income, lower management costs, and less wear and tear of a long-term tenancy often make it the more financially sound option.
In addition to the financial benefits, there are also some other advantages to taking a long-term tenant. For example, long-term tenants can help to improve the security of your property, as they are more likely to report any suspicious activity to you. They can also help to build a sense of community in the area. Many developments do not allow Air BnB as part of their terms due to instability and security risks it can bring, so for many it is not even an option anyway.
If you are deciding whether to take a long-term tenant or a holiday let, it is important to weigh the pros and cons carefully. The best option for you will depend on your individual circumstances and financial goals. Get in touch with us to discuss your long-term rental.
