With rising costs and tax requirements for both short lets and traditional lets, many landlords are weighing up the benefits of the different models.

Since the abolition of tax relief for furnished holiday lettings in April 2025, many moved towards the view that long-term letting is now the more financially viable option, but the introduction of the Renters’ Rights Act has added a further layer to that decision.

More than ever before, the answer to the question “should I run short or long-term lets?” is “it depends.”

Properties in some locations or with certain specifications might be more suitable for one or the other, and even then, there are many more questions to answer before you can decide which will make the most sense.

For me, the bigger question is how well the property is managed and what return that management can realistically deliver.

What the numbers actually show

Long-term rents rose sharply after the pandemic, and losing furnished holiday letting relief made short-term letting look less attractive on paper. Landlords comparing the two models on headline figures alone probably would have settled on a long let, and for some properties, that will still be the right call.

But the full comparison runs deeper than monthly income. Section 21 gave landlords a straightforward route to reclaim their property, and with that route gone under the Renters’ Rights Act, long-term letting now carries less flexibility and, in many cases, more administration, from new tenancy rules to updated record-keeping requirements.

As long-term letting becomes more complex and costly to manage, at Pass the Keys, we’ve seen a marked rise in enquiries from landlords looking to convert to short-term lets. The legislation has prompted a lot of rethinking around the balance between security, flexibility and returns.

There’s also a cost I see left out of these comparisons time and again: the state a property is in when a long tenancy ends. When properties switch from traditional rentals, our franchisees regularly report substantial refurbishment bills, covering everything from new carpets and higher-grade furniture to full bathroom replacements and garden landscaping.

Short lets tend to hold up differently, with regular cleaning and inspection between guests catching minor problems before they become expensive ones. Those costs can materially change the financial comparison between the two models. They rarely appear in a simple monthly rent comparison, but become very real when a long-term tenancy ends and a property needs significant work before it can earn again.

Short-term letting isn’t a free upgrade, though. It comes with its own regulatory and financial considerations. Licensing is already in place in Scotland, planning permission and the 90-night rule apply to whole-property short lets in much of Greater London, and a national registration scheme for short-term lets in England is expected soon, all of which incur extra costs and administration. 

Aside from taxes, mortgage lenders vary in what they’ll allow, too, and landlords on a standard buy-to-let product may need specialist finance before converting.

If you’re going short-term, go professional

None of this means every property should move to short-term letting, and at Pass the Keys, our franchisees are always upfront with landlords about that. Location has a significant bearing on demand, and a property in an area with limited leisure or business trade will struggle to fill the calendar no matter how well it’s managed.

Design and size matter too: for example, a studio apartment in an area that mostly attracts families won’t be as attractive as a home with ample communal space. 

My advice is always to assess this honestly before switching. That means looking at local demand, seasonality, licensing requirements and the practical realities of managing regular turnovers, as well as speaking to an expert who understands the local market.

Assuming a property does suit short lets, there are still widely varied outcomes depending on management decisions.

Professionally-managed short lets can command stronger rates and occupancy, and economies of scale make it easier to grow margins as a portfolio expands, reducing the cost of things like laundry and maintenance, while dedicated teams can also deliver a level of guest experience that is difficult for individual landlords to replicate consistently.

That standard of management has a cost attached, of course. Management fees typically run at 15 to 20 per cent of revenue plus VAT, and short-let income is naturally more seasonal than long-term rent, so a poorly-run listing with weak reviews or low-quality service can easily underperform a traditional tenancy. 

A strong management company can improve the numbers on a suitable property, but it won’t rescue one that was never right for the market, and it’s worth budgeting for higher furnishing and setup costs than a standard let requires. 

Both models can be genuinely profitable, but they also both have the capacity to fail.

What decides it is the work behind the numbers: understanding your local market, budgeting properly for the costs each model brings, and putting a management approach in place that can actually deliver on the return you’re expecting.

Landlords who set a strategy once and leave it alone tend to see their returns drift, whether that’s a long-term tenancy left unreviewed for years or a short-let listing running on pricing and presentation from three years ago.

So my advice, whichever route you take, is to put as much thought into the plan behind your letting as you put into choosing the model in the first place. Review your pricing, your costs and your management arrangement regularly, and treat the decision as ongoing rather than something you settle once and forget.

That’s the work that actually determines your return.

Alexander Lyakhotskiy is chief executive and founder of holiday let management franchise, Pass the Keys