New research suggests that a like-for-like comparison shows short lets earning 21 per cent more than the same home let out long-term.
Research by Revolution Brokers shows that the average monthly long-term rent is currently £943, but the average for a short-term let is £1,137, a premium of 21 per cent.
Regionally, this premium can be much higher. In the South West, for example, where you’ll find popular holiday destinations such as Cornwall and Devon, the short let premium is 35 per cent, followed by the East Midlands, North East, and West Midlands - all at 24 per cent or more.
The brokerage says there are three key advantages to short lets - they provide strong rental yields, problem tenants are only short lived, and some short lets can be classed as a business instead of an investment, so landlords can deduct mortgage interest from their profits.
But the disadvantages are that the risk of void periods is higher, the landlord is responsible for paying utilities bills, and ,ortgage interest rates tend to be higher mainly because the risks associated with short term lets are greater than with long-term rentals.
The founding director of Revolution Brokers, Almas Uddin, comments: “The rise of Airbnb and other similar platforms has brought holiday lets to the forefront of people’s minds when they’re travelling around the UK.
“No longer are hotels the first point of enquiry and while Airbnb has opened the door for non-professional landlords to earn money from their home - following strict guidelines in the process - the increased awareness has created a huge opportunity for professional investors who want to secure better yields than they may be able to do within the regular buy-to-let market.
“Location is obviously all important for a successful holiday let - the potential for extensive void periods means they’re best suited to cities and popular holiday destinations local coastal or historic towns where demand is going to be reliable for much of the year.
“We recently oversaw the financing of a short term let investment in Cornwall with a yield of 18.5 per cent versus the average of 4.0 per cent across the wider area, so they can be incredibly lucrative.”
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