Short Term Holiday Lets vs Long Term Buy to Lets

What is the difference between a short term let and a long term let?

Short-term holiday lets and long term buy-to-lets are best differentiated by their purpose, rather than the periods of time that they are rented out for.

Generally, a short-term let is a property that is let out for up to 6 months at a time; they are often referred to as holiday lets and are aimed at offering temporary accommodation for tourists and holidaymakers.

Long-term lets, also known as buy-to-lets, provide a primary residence for those not wishing to buy a property; long-term let agreements tend to last either 6 or 12 months at a time.

What is a short term let?

By definition, a short term let, or furnished holiday let, is a property that is let out for no more than 6 months at a time. However, their more common purpose is for tourists and holidaymakers to rent out for shorter periods (usually anywhere from 1 night up to four weeks), after the demand for hotel alternatives has increased in recent years.

What are the benefits of short term holiday letting?

Increased Demand

According to the Sykes Staycation Index 2024, over a third (35%) of UK holiday makers prefer more frequent short breaks, with 22% opting for shorter breaks to use their annual leave more efficiently.

By offering short term breaks, holiday let landlords have an opportunity to cater to a wider market, which may result in higher occupancy rates.

Higher income potential

Holiday lets typically attract higher profits than long-term rentals. This is because short-term lets are often priced daily, as opposed to long-term lets which usually work on monthly pricing models.

If your holiday let is successful in terms of bookings, this will likely result in generating higher rental yields than if you let your property long term.

Adopting a flexible pricing strategy available with holiday letting can also help maximise your rental income and increase your earning potential.

Flexible pricing

Letting your property out as a holiday let allows you to regularly adapt your pricing according to demand. If you choose to enter the buy-to-let market, your rental rates will be fixed in conjunction with the agreed contract, usually for a minimum of six months.

For example, in the summer months when demand is at its peak, with a short term let you can increase your prices to make as much profit as possible, as customers are still likely to book regardless. Likewise, as low season bookings may not be as frequent, you are able to reduce your rental prices to continue the flow of bookings and consistent income.

Our guide on how to price your holiday home has more information on how to get the most out of your short term let.

Regular involvement with your property

If you prefer the more hands-on approach of being a property owner, the short term letting market could be perfect for you. The quick and frequent changeovers mean that you have a chance to complete regular checks, clean and fix anything that may have broken.

This is different to owning a buy-to-let property, as it is much more difficult to access your property on a regular basis. The reporting of maintenance is also the responsibility of your tenants, rather than you being able to consistently check yourself.

If you are still uncertain on whether you should choose short-term letting, discover more about why holiday lets are a good investment.

What is a buy-to-let property?

A long term let, or buy-to-let, is generally classed as a property that is let out for a minimum of six months at a time. Buy-to-lets provide a primary residence for people wishing to rent for extended periods, rather than investing in a property of their own. Long term let agreements are usually agreed for either or 12 months.

What are the benefits of long term letting?

Guaranteed consistent income

Although long term letting does not allow you to regularly change your rates based on demand, it does offer a guaranteed amount of income every month. The income your buy-to-let yields is a fixed amount, which benefits those looking for a stable investment.

Holiday lets may potentially generate a lot more revenue for the owner, however it is not guaranteed that you will fill up your calendar with bookings as there are many factors that can influence this. A long-term letting agreement means that you will have a tenant that will be paying you a certain amount of money.

Laid-back approach

While long term letting can be demanding, those with a busy schedule might prefer this option. If you don't have much time on your hands and would be unable to deal with regular changeovers and cleaning duties, a buy-to-let may be the right path for you.

As your tenants will be occupying your property for longer periods, maintenance and other checks are required less frequently. It is also more likely that your tenants will treat your property with care, as it is temporarily their home.

If you don't think you have time for the little things that come with holiday letting, Sykes' Holiday Let Managed Services offer a helping hand to suit your specific needs.

Lower running costs

Long term buy-to-lets require less advertising and marketing than holiday lets, which translates to lower overall costs. They are also lower maintenance, with reduced management fees and utility bills than those associated with short-term lets.

What are the costs of running a short term let vs long term buy-to-lets?

When buying a short term holiday let or long term buy-to-let, you will need to apply for a holiday let mortgage or a buy-to-let mortgage.

However, there are additional costs of running a holiday let or buy-to-let property. If you work with a holiday let agency, such as Sykes, they will handle the typical day-to-day tasks involved, from finances to housekeeping and changeovers.

Long term buy-to-lets can expect to incur a fee from 8-10%, while a short-term management fee typically ranges between 12-15%, or higher depending on the services you choose.

Extra costs such as utility bills and council tax must also be taken into consideration, as well as renovation and keeping the property up-to-date.

Where should you buy a holiday let?

Whether you're buying a short-term holiday let or long term buy-to-let, choosing where to buy a holiday home is one of the most important decisions to make.

If you're looking to buy a short-term let, urban areas such as Liverpool or Bath are a great choice with high demand for short-term letting accommodation in city locations.

For holiday lets, choosing traditional honeypot locations such as Cornwall and Devon are ideal for boosting occupancy rates during peak seasons. Locations such as the Lake District also offer good earning potential, with popular National Parks and areas of natural beauty.

Short term let vs. long term buy-to-let: Which is better?

Although there are pros and cons to both running a holiday let and a buy-to-let, there are better better financialadvantages to holiday letting.

While costs may increase in response to demand, the profits generated from holiday letting, there are a number of energy-saving ideas which can offset these expenses.

Overall, short term lets can be a great way to attract more bookings and generate a higher rental income. If your budget allows, holiday home investment offers plenty of lucrative benefits. Contact our friendly team of property experts today to find out more.