The UK is an internationally-renowned holiday destination, which also benefits from a significant domestic-tourism market. As a result, there is a huge demand for short-term holiday rentals and where there is huge demand there is the potential for significant profits, but does it make for a better investment than a residential buy-to-let? We look at the key differences between the two.

There are still a lot of regulations and practicalities to consider

If you’re thinking of moving into the short-term-lettings market to escape the regulations of the residential-lettings market then you may want to think again. There is still a raft of laws and bylaws to keep in mind as well as tax and practicalities such as mortgages and insurance.

The health of the short-term-lettings market is proof that these obstacles are far from insurmountable, but they are there and they do have to be kept in mind. Landlords also need to remember that regulations can and do change and can vary by area.

Even if you are planning on letting out a room in your own home (as opposed to an entire property), you will still have to check laws and by-laws and also get clearance from your mortgage lender and any relevant insurance providers.

Location is key

If you already have a property you are considering turning into a short-term let, then you will need to do your research to see if its location is likely to appeal to holidaymakers. If you are considering buying a property specifically for use as a short-term rental, then you will need to give careful thought to your choice of location.

Rural properties are often much more affordable than ones in cities, but they may only generate an income for a part of the year and if you choose to sell, you may have to wait a while for a buyer. City-centre properties tend to be much more expensive, but people take city-breaks all year round, plus you may have the option to tap into other markets if you decide that the short-term-lettings market isn’t for you after all.

Short-term lettings involve much more work than residential lettings

Even though the residential-lettings market is governed by all kinds of legislation, it is relatively hands-off compared to the short-term-lettings market. For example, in the residential-lettings market, you are only going to have to market a property on a very occasional basis, whereas the short-term-lettings market requires continual marketing.

What’s more, the fact that stays will be much shorter will mean that the property needs to be turned over more frequently and it’s usually a good idea to offer a cleaning service when there are guests in the property.

Guests will usually have very different expectations from tenants

Tenants are looking for a home in which to live, guests are typically looking for a hotel-like experience. While there is likely to be some degree of crossover between their needs and wants (e.g. good transport links and convenient access to local facilities and amenities), guests are likely to expect a much higher level of service from their landlord and, increasingly, a premium or even luxury standard of accommodation.

Author Bio

Indlu are estate and letting agents in Manchester, offering a no sale, no fee service for both sales and lettings. Indlu also have a range of high yield buy-to-let properties in Manchester for sale throughout the city centre.

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Daniel Peacock.

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