The short term rental industry is growing rapidly in the UK – and short term rental platforms like Airbnb and Expedia have become household names. With approximately 471,000 short-term rental properties available in the UK as of 2024, it’s likely that someone you know lets out their property on a short term basis.
So what is a short let? Are all Airbnbs considered short term rentals in the UK? And how many days, weeks, or months are they typically let for?
Getting to know short term lets. UK definitions and guidelines
In the UK, a property rented for a short duration – typically anything from a single night to several months – is usually considered a short term let. Meaning that most Airbnbs and holiday rentals are considered short term lets.
Like hotels, short term rentals predominantly cater to holidaymakers, business travelers, or anyone needing a place to stay on a temporary basis. They’re managed a little differently to longer term leases, and are often advertized and booked via online platforms (like Airbnb).
Short term rentals are regulated differently depending on where you are in the UK. Before you begin the rest of your planning and research, take a look at our comprehensive guide to the UK’s new rules for holiday lets.
What is a Furnished Holiday Let (FHL)?
Property managers across the UK – in London, Wales, Scotland, and Northern Ireland – should also be aware of another term used in the context of short term rentals: Furnished Holiday Let (FHL).
An FHL is a specific kind of short term let that functions as a business and caters to holidaymakers. FHLs can be lucrative for property managers because of their unique tax benefits (such as capital allowances on furnishings, and business rates). But to be eligible, they must meet a range of specific criteria.
An FHL, as the name implies, needs to be furnished, and needs to provide essential amenities to guests. Beds, cooking and dining facilities, and seating are some of the essentials in this list. To receive business rates, FHLs need to be made available to be let for at least 210 days of the year – and must be actually let (to renters from the public, not friends and family) for at least 105 days annually. As they are strictly short term rentals, they also cannot be rented for more than 31 continuous days at a time.
How long is a short term let (according to UK regulations)?
In some parts of the world – like the USA – governments and local councils impose strict caps on short term lets. UK regulations are generally more flexible, and the length of a short term rental tenancy is more fluid. However, the number of days a short term rental property is let for (at one time, or annually) will affect how it’s taxed and regulated. For property managers, it’s important to understand how short term is defined in your property’s specific jurisdiction – to ensure compliance with local guidelines, and maximize potential tax benefits.
Short term in the context of an FHL is capped at 31-day tenancies. An FHL must be publicly rented for at least 105 days a year – and each short term (fewer than 31 days) tenancy can be counted towards this total. Longer tenancies may occur, but don’t contribute to this total – with one exception. Longer tenancies may be counted if the tenancy period is extended as a result of unforeseen circumstances (such as when guests fall ill or cannot vacate due to delayed flights).
For a property manager looking to establish a short term rental in London, The Greater London Council Act mandates that planning permission must be obtained from the council beforehand. This rule allows the number of short term rental properties in the area to be managed. However, for properties that are rented for fewer than 90 days annually, obtaining planning permission is not a requirement.
How short term lets differ from mid term and long term lets
While short term lets typically cater to tenants wanting a temporary place to stay, mid term lets and long term lets are suited to tenants who plan to stay or live at a property for an extended period.
Taking the UK’s 31-day rule on FHLs as a guide, short term tenancies are most often days or weeks long rather than months (however, this measure is more flexible for non-FHLs). On the other hand, tenancies for mid term rentals are more likely to fall within the 6-12 month range, while long term tenancies often last for at least a year or more.
Each provides its own unique purpose, and what guests expect from long term, mid term, and short term stays is different – in terms of the amenities provided, as well as the level of landlord and tenant interaction. Managing mid term, long term, and short term lets also varies considerably as a result of their different regulations, insurance, and management requirements. In summary:
Short term lets
- Length of tenancy: Tenancies for short term rentals usually range from a day to six months.
- Purpose: Short term lets typically provide temporary accommodation for tourists and business travelers. They’re popular in holiday destinations and city centers.
- Income: Short term lets may yield higher nightly income than mid and long term lets, which is often affected by seasonal fluctuations in demand. Periods of non-occupancy may also occur, leading to fluctuating income.
- Regulations: In the UK, short term rental rules are reasonably flexible. However, FHLs must meet specific criteria to be eligible for tax benefits. Licenses and planning permissions are also often required for short term rentals.
Mid term lets
- Length of tenancy: Mid term rental agreements typically last for 6 months up to a year.
- Purpose: Ideal for digital nomads and flexible freelancers, mid term lets often cater to professionals on temporary contracts. They may also be favoured by tenants who need a temporary place to stay in the process of relocating, building, or renovating.
- Income: Mid term rental income can vary, but typically nightly income is higher than it is for a long term let and less than the standard for short term rentals. Income is slightly more reliable than it is for a short term let.
- Regulations: Standard housing regulations apply to mid term lets, though they may need additional licensing in specific areas, especially in Scotland. Mid term lets may fall under standard rental agreements.
Long term lets
- Length of tenancy: Anything over 12 months falls into this category, with
- Purpose: Tenants in long term lets may be seeking to lay down roots and live at the property for several years.
- Income: Longer tenancies mean that the income provided is steady and predictable with less risk of vacancy. However, rates are often lower per night than they are for short term or mid term lets.
- Regulations: Long term rentals are governed by comprehensive tenancy laws including Assured Shorthold Tenancy (AST) agreements in the UK. Some regions, like Scotland, have stricter protections for tenants in long-term agreements.
Rules, insurance, and licensing for mid term lets and long term lets
Short term rental managers in the UK must follow strict safety standards, and in some cases, meet FHL guidelines, obtain planning permission, and abide by local licensing schemes (especially in high-demand areas like Edinburgh).
Long term lets fall under the UK’s private rental sector regulations. Landlords must operate in line with the Homes (Fitness for Human Habitation) Act 2018, maintain energy efficiency, and comply with tenant rights under the Tenant Fees Act 2019. Furthermore, these properties often require mandatory deposits and clear protocols for eviction and tenancy renewal. While they are stable investments, long term lets can be administratively complex – particularly regarding tenant management and legal obligations. Mid term lets are usually subject to the same requirements as long term lets, especially if they exceed six months.
It is important to consider not only tenancy length, but tenancy type when figuring out which rules apply to your rental property. In the UK, most mid term and long term lets are assured shorthold tenancies (ASTs). AST rules apply to properties that are a tenant’s main accommodation (not holiday lets). However, several other tenancy types exist – many of which have their own rules that apply to eviction notice periods, tax, licensing, and more.
The popularity of short term lets
In the modern, globalized era we live in now, renting looks very different to how it used to. People are traveling more than ever, digital nomads are on the rise (along with other unique working arrangements), and the effects of global pandemics have been felt by businesses all over the world. And short term letting has thrived – in the UK, and all over the globe.
One explanation for the short term letting boom in recent years is this: the whole industry has had to become increasingly versatile to meet the changing demands of renters and property managers alike. In a transient world, the short term letting industry benefits from being a dynamic one. Now, there are more and more tools available to help streamline the rental process: from the proliferation of online platforms that allow for quick and easy booking, to guest vetting services that keep properties more secure.
Better income potential
One of the biggest differences between a short term tenancy and a long term tenancy is how much income each creates. Short term letting generates a higher nightly revenue than long term letting on average. Short term lets also often benefit from dynamic pricing, which helps maximize profits in peak seasons.
According to UK short term rental data from Lighthouse, the income potential of short term rental properties is growing. The September 2024 report shows that average daily rates and revenue per short term rental property have grown by 71% since 2019 – outpacing the rate of inflation by a very substantial 24%.
Flexibility
A short term tenancy might last anywhere from a single night to several weeks in the UK, making it far more dynamic and flexible compared to its mid and long term counterparts. Want to put up your family for a weekend, or stay at the property yourself – exactly when you want to? Without a long term tenant in place, you can.
You can also adjust your letting strategy to take advantage of peak periods, making for better returns when demand is high. Some property managers may even choose to switch between mid and short term leasing across the year to reap the benefits of both.
Regular maintenance
Let’s quickly bust a myth about upkeep in short term rentals. Increasing guest turnover – and exposing a property to more foot traffic – might seem counterintuitive to maintaining its condition. But more frequent guest turnover also means more cleaning and inspections – both of which help to keep a property in great condition.
Unlike in mid or long term rentals, issues that arise during short term lets aren’t going to be swept under the rug for months or years before a tenant moves out. Small issues that might have been missed or ignored are able to be addressed much more quickly, which means they’re less likely to turn into bigger (and more expensive) problems down the line.
Comprehensive security and cover
Short term lets come with frequent guest turnover, which can come with risks. However, short term rentals are also very well-covered.
Hosts can claim up to $1 million using Airbnb’s AirCover in cases of guest injury or property damage. However, this doesn’t replace standard landlord or property insurance and has certain exclusions. Superhog’s cover, which is specifically tailored to short term rental properties listed on platforms like Airbnb, can complement AirCover by offering extended damage protection and a damage waiver fee. Additionally, guest verification tools can help to prevent issues arising as a result of problem tenants.
Popular UK destinations for short term lets
According to Lighthouse’s September 2024 report, the UK cities where short term rentals are most in demand are London, Edinburgh, and Birmingham. Properties in these cities were reserved for the highest number of nights per year on average. York, Manchester, Liverpool, and Brighton are also popular.
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