In Edinburgh, a city with great potential for both long and short term rental opportunities, it can be difficult for landlords to decide what type of tenancy is best suited to both them and their property. We take a look at the main areas for landlords to consider when it comes to deciding between long term and short term lettings.
Edinburgh is home to a bustling lettings market, where students, professionals and families are all looking for quality properties where they can settle long term. The city, however, also enjoys a thriving tourism industry – with people travelling from all over the world to attend the various festivals and attractions on offer – making short term rentals a profitable and tempting market for many landlords. Below are some of the areas that landlords should consider when deciding if long term or short term lettings is best for them and their property.
I rely on regular rental income.
Purchasing an investment property involves a significant financial outlay, and so, many landlords rely on rental income to cover their mortgage payments. For landlords relying on their rental income in this way, it is essential to have regular and dependable monthly payments.
In Edinburgh there is currently a shortage of high quality, long term lettings stock, and a large number of properties available for short term rentals, so landlords with quality properties to let will most likely find long term tenancies to be the more secure option for providing regular rental income, as demand is high all year rather than seasonally.
Landlords who want to encourage tenants to rent their property long term, generating a regular rental income, should aim to provide a quality home where tenants are happy to settle.
I want to minimise void periods.
Similar to above, for landlords relying on their rental income, extensive or frequent void periods - when the property is empty - can be disastrous.
In Edinburgh, the short term lettings market is growing quickly. This is great news for anyone looking for a short term let as there is an abundance available on the market, but not so good for property owners, as lets can be more difficult to secure, leading to the possibility of void periods.
For landlords looking to minimise void periods, long term tenancies are likely to be the best option, although this can also be dependent on the type of property and where it is located. Long term tenancies can often offer peace of mind, which is not always the case with short term letting. This is because long term tenancies tend to be more predictable than short term, as tenants stay longer and usually have a notice period before they leave, giving time to find replacement tenants. Properties used for long term tenancies can experience void periods too but, due to the lack of quality rental stock, it can be easier to find long term tenants, especially for one and two-bedroom flats.
To avoid void periods, property owners aiming for both long and short term rentals should ensure that their property is high quality and priced realistically for the market that they are aiming to attract.
I want to maximise rental income.
For some landlords achieving as high a rental income as possible is more important than having the property tenanted at all times. For these landlords, short term lettings may be a good option.
Short term rental properties tend to demand a considerably higher rent than the same property would for a long term tenancy. This is especially true during peak periods, such as the Edinburgh Fringe Festival or Hogmanay, when short term rental prices can rocket.
Regardless of the length of the proposed tenancy, landlords who want to maximise their rental income should:
- Provide quality furnishings
- Ensure the decor, fixtures and fittings are in good condition
- Keep on top of maintenance issues
- Use quality marketing photographs
I want to use the property occasionally.
A property is a significant investment - in terms of both time and finances - and so, it is not uncommon for landlords to want to enjoy the property themselves from time to time. If a landlord wants to use the property regularly, for example for a few days during the Festival in August each year, then short term lets would be better as the property can simply not be let during the periods it is required.
Landlords who let to long term tenants can still use the property themselves when it is vacant, but it can be more difficult to predict when this will be. Unless a prior agreement is in place, it is unlikely that the property would be vacant when the landlord wants to use it.
I have limited time to dedicate to renting my property.
Letting a property – whether long term or short term – can be time-consuming for landlords who manage their property themselves, however, this is especially true for landlords dealing with short term lets.
Landlords managing short term rentals will be required to regularly liaise with tenants to arrange booking and check-ins, and ensure that the property is cleaned and in good order in between rentals. Short term lets also include additional items such as towels and bedding, which will have to be cleaned before the next tenants arrive, and tenants will most likely expect any maintenance issues to be dealt with immediately. Short term lets are also very dependent on positive reviews, so it is crucial that the property is always at its best.
Many landlords who are short on time use a letting agent; there are a growing number of companies specialising in short term lets, in addition to over two hundred agencies in Edinburgh alone focusing on long term lets. It is important for landlords to find a letting agent that they can trust to manage their property.
I do not want to risk upsetting the neighbours.
Many landlords have lived in their let property themselves for a few years before they come to rent it. These landlords will often have well-established relationships with their neighbours, which they do not want to jeopardise. Other landlords may simply be aware that a property is not well soundproofed, or know that other residents in the block or development are sensitive to noise. For these landlords long term letting would be the better option.
Noise complaints are one of the biggest issues for property owners pursuing short term tenancies. Although long term tenancies are not immune to the issue of noise complaints, these can be more easily managed as the landlord or letting agent can work with the tenants to make them aware of the issue and help them to manage it. This is not as simple for short term tenancies where the tenants are continually changing, and the majority of tenants have rented the property to enjoy whilst on holiday.
Neighbours of properties used for regular short term lets can also be annoyed by tenants leaving communal doors open, not knowing where to dispose of rubbish, allowing non-tenants in the block, and generally not being as respectful of the property as a longer-term tenant might.
I want to minimise wear and tear to my property.
Wear and tear is unavoidable in lettings properties; landlords with both long and short term tenancies should expect the property to deteriorate over time through normal tenant use. The level of wear and tear, however, can be significantly higher in properties let for shorter tenancies. This is mainly due to the high turnover of tenants and the nature of short term lets with a high number of properties being used for celebration trips or holidays.
I like to know exactly who is renting my property.
Many landlords want to know as much information as possible about who is living in their property. For landlords renting long term this is possible as, in most cases, stringent referencing checks are done to ensure that the tenant is suitable. Landlords can also meet with their tenants and get to know them over time.
For short term tenancy landlords, it is not possible to get the same level of detail. The nature of short term tenancies means that there is a high turnover of tenants, and apart from paying a deposit, it is unlikely that any additional referencing check will be done, making it more difficult to verify the identity of the tenant and for the landlord to build a relationship.
Benefits of long term lettings
- Fewer void periods
- Regular rental income
- Can get to know tenants
- Less wear and tear
- Can let furnished or unfurnished
Benefits of short term lettings
- Higher rental income per week
- A large number of potential tenants during peak periods
- The landlord can use the property
- Flexibility to rent for a fixed period only (e.g. one month)