A property owner, who wants to make a return from a property that is not occupied long term, may be tempted to look at short term rental as a profitable activity. Certainly, the rental charge can carry a premium compared to long term letting, but to achieve that premium there is a range of additional services and costs that need to be planned for.
Let’s look at some of the things a property owner needs to consider. Then you can see whether your property is close to being ready for short term letting.
- The legal aspects
- Financial – mortgages and similar
- Marketing the property
- Financial – getting the money in
- What do I need to provide
- A full-time job?
- Is there another way of doing it?
The Legal Aspects
There are quite strict legal requirements about what a property owner must provide for short term tenants. The prospective landlord needs to fulfil them. Do the title deeds for the property have covenants or requirements about how the property is used? Are there local laws restricting short term rental. Some authorities insist on a minimum rental period of 3 months. Others forbid short term rental for more than 90 days a year. If the property does not thoroughly check the legal status then hostile neighbours may do so, and cause difficulties.
Financial – Mortgages and Similar
If the property is not outright owned by the landlord the loan finances involved in its purchase may well impose restrictions about rental use. These may be amended, by negotiation, but progressing towards rentals without checking their status could lead to bad consequences.
Of course, having adequate building and contents insurance is a given for any property owner, but just think what additional insurance needs rental use brings. Very important is insurance cover to deal with any claim against the property owner, resulting from the short term let. This could be from tenants, but could also be from other people who feel aggrieved, like neighbours. Having lots of tenants is certainly good for profits, but is hard on the property and its contents, so insurance that adequately covers such heavy use needs to be in place.
Marketing the Property
The property owner needs to be able to tell potential tenants about the wonders of their place. That must be set up to give good up to date information about how nice it is, but also about when it is available. It would be a good idea to include a booking system that the tenant feels happy with and is easy to use.
Financial – Getting the Money In
Closely related to an efficient booking system is a robust payment mechanism. This is essential for the tenant to have confidence that the property is well managed.
What do I Need to Provide?
Pretty much everything! The typical short term tenant is looking for a home from home equivalent, so all cooking, eating, relaxing, entertainment and everything else facilities.
Whilst it is not necessary to provide all the food they will eat – short term tenants like to choose and buy their special food – things like cupboard basics, seasonings, sauces etc will be appreciated. Good internet connection is a definite requirement.
A Full-Time Job?
Reading all of the above the property owner may think this is quite a demanding role. They will certainly need to be contactable 24 / 7 in case anything happens. Good preparation and well designed systems will help to make the burden less for the property owner, but they need to accept they are on-call.
Is There Another Way of Doing It?
Many property owners decide to enlist the help of specialist letting management companies to take on the responsibilities of short term rental. Of course, this reduces the profit, but some property owners might find this worthwhile for the peace of mind.