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Short-Term “Airbnb-style” Lettings

Are you considering entering the short-term lettings market? It can be a fantastic source of income for property owners but there are downsides and risks. Here we look at the pros and cons and highlight some issues property owners need to consider before taking the plunge.

The Growth of the Short-Term Lettings Market

In recent years there has been a huge increase in the use of websites such as Airbnb, where home owners can advertise a room or a whole property as available for a short-term let. Originally, these websites were intended for consumer-to-consumer use – part of the “sharing economy” – but they are increasingly being used by property investors who see that there
is potentially more profit to be made from short-term lets than assured shorthold tenancies.

What are the Benefits of Short-Term Lettings?

There is a rapidly expanding market for short-term lettings, with many visitors preferring the independence of self-catering accommodation to a hotel stay. Agent websites such as Airbnb, HomeAway, and others make it easy for landlords to access this market.

Short-term lets are generally more lucrative for landlords than longer term lets, generating up to three times the income. In a prime area, granting short-term lets can be a reliable source of income.

What are the Downsides of Short-Term Lettings?

With a rapid turnover of guests, there is inevitably more work for landlords to do in terms of management and maintenance of the property. Landlords will either need to set aside the time to undertake this work themselves or appoint an agent to do it for them.

Using a property for short term lets can throw up issues with guests, neighbours, superior landlords and the local authority. Landlords need to anticipate the issues that may arise and be ready to deal with them if and when they do. For example, guests may complain about the facilities, neighbours may be unhappy with the behaviour of the guests, landlords may consider short-term lettings to be in breach of the lease covenants, and the local authority may receive complaints about noise or health and safety issues and take enforcement action.

The growth of the short-term let market in a particular area can have adverse consequences for local residents. Problems can include noise and disruption caused by guests, an increase in property prices, and a reduction in housing stock as investors look to acquire accommodation.

What do You Need to Consider Before Granting Short-Term Lets?

Here are some keys issues landlords need to consider before entering the short-term lettings market:

Planning Restrictions

In London, where living accommodation is much-needed, there are restrictions on using residential accommodation for short-term lets. Short-term lets are permitted provided they do not exceed 90 aggregate nights in any one calendar year. (Airbnb now restricts London hosts from letting their properties for more than 90 nights per year; other platforms do not impose this restriction.) If you intend to exceed the 90 night limit, consider applying for a change of planning use from residential (C3) to hotel use (C1).

Local authorities find this rule difficult to enforce as they do not necessarily know how properties are being used. It is possible that a notification requirement will be introduced whereby owners must notify the local authority of the dates when the property is being used for short-term lets.

Lease Terms

If you are a leaseholder, as opposed to owning the freehold of your property, does your lease allow you to grant short-term lets? Such lettings may fall foul of various restrictions in the lease such as:

  • · a requirement to use the property only as a private residence (the courts
    have held that short-term lettings are too transient to qualify as “private
    residence” use)
  • · a prohibition on using the property for a trade or business
  • · a prohibition on causing a nuisance (could be an issue in terms of the
    behaviour of guests)
  • · restrictions on subletting

If the short-term let use constitutes a breach of your lease your landlord may seek to forfeit (i.e. cancel) the lease or seek an injunction preventing you from using the property in this way. You may incur significant legal costs if your landlord takes such steps.

Mortgage Terms

Your mortgage terms may not allow you to use the property for short-term lettings. A breach of your mortgage terms may result in the property being repossessed unless you can repay the entire mortgage.

Buildings Insurance

Normal residential buildings insurance is unlikely to cover this sort of use. Check your policy and if necessary obtain specialist insurance.


An energy performance certificate (EPC) is needed for a property rented out as a holiday let for a combined total of four months or more in any 12-month period. If this applies to you make sure you have a valid EPC to avoid the local authority taking enforcement action.


There may be valuable items in your property and you will be allowing strangers to have access to it. How will keys be collected and returned? Who will check that the property is secure and your possessions intact?

Health & Safety

Ensure appropriate checks are made on gas and electrical installations and as regards fire safety.


Tax is a specialist area and beyond the scope of this note. Ask your accountant to advise on your tax position.

The Future of Short-Term Lets

Despite the pitfalls and obstacles mentioned above, the short-term letting market looks set to remain strong. Are you already involved in it? Are you tempted to give it a try? Have you been affected by the growth of short-term lettings in your area? As always, we welcome your comments below.

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