Short-term letting in the UK: higher returns, if the numbers are right

Why investors look at short-term lets

Letting by the night through Airbnb, Booking.com or a serviced-apartment operator can earn far more each year than a standard tenancy. It also brings advantages that matter to GCC investors:

• Higher income per property: strong months can earn several times a monthly rent.
• Personal use: stay in the apartment yourself when you visit the UK.
• Flexibility: genuine short stays are not tenancies, so the Renters’ Rights Act does not apply and you can sell with vacant possession at any time.
• Pricing power: rates rise around football matches, concerts, conferences and graduations.

The numbers that make or break it

• Occupancy — the share of nights booked, and the most important number of all.
• Average nightly rate — set by location, quality, reviews and season.
• Length of stay — shorter stays mean more cleaning and laundry.
• Management — professional operators typically charge 15–25% of revenue plus VAT.
• Platform and payment fees.
• Bills the owner pays — energy, broadband, council tax or business rates, and the service charge.
• Reviews — a poor rating cuts both occupancy and price.

Worked example: a £190,000 one-bedroom apartment

A one-bedroom city-centre apartment averaging £155 a night across the year at 70% occupancy (256 nights). Figures are illustrative and before tax.

• Revenue: 256 nights × £155 = £39,680
• Platform and payment fees (about 10%): £3,970
• Management (20% plus VAT): £9,520
• Utilities, broadband and council tax or business rates: £2,600
• Service charge: £1,800
• Cleaning and laundry, net of guest cleaning fees: £1,500
• Consumables, wear and tear: £1,500
• Insurance and fire safety: £600
• Net income: about £18,200 a year — a 9.6% yield on the price

The same apartment on a long let

• Rent: £1,100 a month, or £13,200 a year
• Management (8% plus VAT): £1,270
• Service charge: £1,800
• Compliance and insurance: £400
• Maintenance and void allowance: £700
• Net income: about £9,000 a year — a 4.8% yield

What the difference means

In this example the short let earns about £9,200 more each year — about double the long-let income. Over five years that is roughly £46,000 extra: enough to fund most of the deposit on another apartment, which is how short-term letting can grow a portfolio faster.

How sensitive is it?

The same apartment and costs, changing one number at a time:

• 70% occupancy at £155: about £18,200 net (9.6%)
• 60% occupancy at £155: about £14,400 net (7.6%)
• 50% occupancy at £155: about £10,700 net (5.6%)
• 70% occupancy at £130: about £14,000 net (7.4%)
• At £155 a night, the short let still beats the long let down to about 46% occupancy.

Rules to check before buying

• The lease: many apartment leases ban short lets.
• The mortgage: standard buy-to-let mortgages usually prohibit them — you need a holiday-let mortgage.
• Tax: the special furnished holiday lettings regime ended in April 2025, so short lets are now taxed like long lets, with mortgage interest relief limited to the tax credit.
• Council tax or business rates: a property available for at least 140 nights and actually let for 70 pays business rates instead of council tax.
• Registration and planning: a national registration scheme for short lets in England is expected, and planning rules may tighten — check the position for the building and area.
• Safety: a fire risk assessment, gas and electrical certificates, and specialist insurance.

A balanced strategy

Many investors combine approaches: short lets in peak seasons, mid-term lets of one to six months for corporate and contractor stays in quieter months, and personal use when visiting. Others start with a long let and switch once the building and location are proven.

How BPG helps

We test each apartment against both strategies before you buy — lease and mortgage checks, realistic pricing and occupancy for the building, and a full net-return comparison — and arrange specialist management through our partners for whichever route wins.