Short let apartments are homes available to rent for at least one week and up to a period of six months. They are usually popular with tenants in need of short-term accommodation who do not wish to live in a hotel for an extended period of time. The advantage of short lets is that they offer flexibility to landlords, allowing them to live in their property during vacations. At the same time, short lets can prevent void periods for properties that would otherwise be vacant. These tenancies offer landlords up front rent with higher yields than long term lets because tenants will pay extra for access to home comforts and privacy.
Understand the Market
Landlords should ensure that they understand the market for short lets in their chosen location. It is important to know the average market rent, as this will determine the rent that clients are willing to pay for short lets in your area. The good news is that in most locations there is a shortage of short term accommodation, because landlords generally prefer the security of long-term lets, especially if they rely on rental income to pay a Buy to Let mortgage. This means that if you are in a position to offer short-term lets you are likely to experience periods of high demand.
Demand for most short-term lets will vary throughout the year, depending on the location of the property. Big cities like London, Birmingham and Manchester are likely to benefit from a range of different clients who wish to let in the short term.
These tenants could be corporate clients working on business projects throughout the year, visiting academics at local universities during term time, or tourists wishing to stay for a longer period during the summer months. Landlords should do their research, contacting local letting agents, to understand the demand for short let properties in the area, asking about likely void periods and most popular times for different types of tenants.
Target the Right Client
For landlords, an important aspect of successful short lets is targeting the right client. If your apartment is located in a large town or city with a thriving business community, it should be possible to target corporate clients who come to the area to work for a few weeks or months at a time. In order to be attractive to business clients the property will need to include smart, high-end features and be located near local amenities and transport routes.
Locations with one or more universities could prove attractive for visiting academics who make short-term visits to the area for research or teaching posts. The business or institution they work for could pay rent in advance, and if all goes well this arrangement could lead to repeat business.
Landlords who hope to offer summer lets to tourists when student tenants have vacated the property should consider how popular the area is during holiday periods. Some university towns, such as Oxford, Cambridge, York or Bath may have high demand for short term lets outside of term time, offering landlords a great opportunity to maximise their investment. But not all locations are equal, and it is important to check that these expectations are realistic before investing.
Another potential source of short-term lets is sports tourism. If you happen to own an apartment near a major sporting venue you may be able to capitalise on demand at certain times of year. Apartments in the Wimbledon area of London are very popular (and command high rents) during the Wimbledon Tennis Championships, and properties near Wembley, Ascot or other famous sporting locations may command attractive rents at times of high demand. As with all other target clients, landlords who do their research carefully are most likely to profit.
Don’t Forget Your Obligations
Short let tenancies should provide tenants with fully furnished accommodation and rental fees will usually include all bills apart from telecommunications and consumable goods. Just as with any other property let, landlords are required to comply with health and safety laws and must ensure that their properties have valid gas safety certificates. In addition, furniture, soft furnishings and electrical appliances must be fire-safe and the property should also have an energy efficiency certificate.
It is important to ensure that there is a complete inventory for all the fixtures and fittings provided at the beginning of the tenancy, and that landlords are insured for personal liability (in case of accidents that occur on the property) as well as for the building and its contents.
Choosing the Right Letting Contract
Short term lets fall into a complex legal area, because the shortest time period for the standard Assured Shorthold Tenancy (AST) is six months. Landlords who want to offer a short let of less than six months can choose to offer tenants an AST with a mutual agreement to end the contract early, but if the tenant decides they want to stay longer it can prove difficult to force them to leave.
Another option can be to offer clients a licence to occupy (commonly used with lodgers), but this is only possible when landlords live at the property for the majority of the time. If landlords wish to offer a short let for their property while they are away for up to six months of the year, a licence to occupy can be a neat solution.
If a short term let is for a period of up to three months, the best solution may be a holiday housing letting agreement, which is a licence to occupy that clearly indicates that the arrangement is temporary and short term.
Whichever route landlords choose, it is important that the terms of the contract are clear from the outset, as problem tenants can prove time-consuming to evict.
Use a Letting Agent to Manage the Property
Unless landlords manage their property portfolio full-time, it is probably helpful to employ a specialist letting agent to manage short-term lets.
The nature of the business means that there is likely to be a high turnover of clients and this can mean a lot of associated paperwork. The right letting agent will keep the apartment occupied and they can usually deal with any maintenance and repair issues quickly and efficiently.
Letting Agents will also have systems in place to manage legal aspects of short lets, such as credit and background checks on tenants, and will ensure that deposits are placed in a recognised government deposit scheme.
As with any service, letting agents will charge a market rate for their services, and it is important to compare the different agents in your chosen area, and to check carefully what is covered in the management fee.
Ensure that any agent you employ is a member of one of the main trade bodies for the property rental sector, such as the Association of Residential Letting Agents, the National Association of Estate Agents and the National Approved Letting Scheme, so that you know they will abide by a strict code of conduct. Agents that are members of these bodies are signed up to the Property Ombudsman, meaning that if they act unfairly or administer the property badly, the landlord has a right of redress.
As long as landlords do their homework before embarking on short let apartments, they can be a good way to maximise a property investment.