The rise of short term lets has transformed the UK rental landscape. By offering properties for stays from a single night to several months, landlords can achieve significantly higher yields than traditional buy-to-let models. In this comprehensive guide, we explore how short term lets work, the benefits and challenges, regulatory considerations, financial implications and practical tips to deliver consistent returns in 2025 and beyond.

Understanding Short Term Lets

Short term lets—sometimes called serviced accommodation—allow landlords to rent out residential units for periods under six months. Unlike assured shorthold tenancies, which typically run for six months or more, short term lets cater to tourists, business travellers, relocators and professionals on temporary contracts. Platforms such as Airbnb, Booking.com and Vrbo facilitate bookings, but success depends on factors including location, quality of furnishing and professional management.

Why Choose Short Term Lets?

The primary advantages of short term lets include:

  • Higher rental yields: By charging nightly rates, landlords can generate gross yields of 7–10 percent in prime locations, compared to 4–6 percent for long-term lets.
  • Flexibility: Owners retain the option to use the property personally during void periods or sell when market conditions peak.
  • Market diversification: Combining short term lets with traditional buy-to-let holdings smooths cash flow and reduces reliance on a single income stream.
  • Quality of guests: Serviced accommodation often attracts guests who treat the property like a hotel, maintaining standards and reducing wear and tear.

Market Trends and Data

Recent data underlines the growth of short term lets in the UK. According to a Commons Library briefing, the number of listings for stays under 28 days rose by over 60 percent between 2018 and 2023 . Revenue per available night across major UK cities now averages £90–£130 depending on seasonality and location. Zoopla reports that serviced apartments in central London deliver net yields up to 7 percent—even before fees—making short term lets an attractive option in high-demand areas.

Regulation and Compliance

Operating short term lets requires strict compliance with planning and safety regulations. In Greater London, properties may only be let for up to 90 nights per calendar year without requiring planning permission. Outside London, individual local authorities set their own limits—often between 60 and 90 nights. Hosts must also meet fire safety regulations, provide gas and electrical certificates, and hold appropriate landlord insurance covering holiday or short-stay rentals. Full guidance is available on the Planning Portal Planning Portal.

Location Selection

The success of short term lets hinges on location. Key considerations include:

  • Transport hubs: Proximity to airports, major train stations and motorways attracts business travellers and tourists.
  • Local attractions: Areas near cultural venues, historic sites or business districts command premium nightly rates.
  • Seasonal demand: Cities with annual festivals (Edinburgh Fringe) or coastal towns (Brighton) see spikes in occupancy and rates.
  • University presence: Towns with universities benefit from visiting academics, conference guests and family stays.

Operational Best Practices

To maximise the performance of short term lets, landlords should adopt professional standards:

  • Partner with a specialist serviced-accommodation manager to handle bookings, guest communications and cleaning.
  • Invest in professional photography to showcase the property on major platforms.
  • Use channel-management software that synchronises availability and pricing across multiple booking sites.
  • Implement dynamic pricing tools to adjust rates based on demand, seasonality and local events.
  • Provide high-quality furnishings, linens and guest amenities, and maintain a rigorous cleaning schedule to secure five-star reviews.

Financial Considerations and Taxation

Income from short term lets is subject to income tax. However, if you meet the conditions for furnished holiday lettings relief—such as at least 70 nights let per year and no more than 30 continuous nights per booking—you may benefit from advantageous tax treatment including capital gains relief on business assets. Stamp Duty Land Tax still applies on purchase, with higher rates for additional properties. Many landlords structure operations through a limited company to optimise tax efficiency. Always consult a specialist adviser to ensure compliance and structure your investment effectively.

Risk Management

While short term lets can deliver superior returns, risks include void periods, platform commission fees (typically 3–15 percent), regulatory changes and higher management costs. Mitigation strategies involve:

  • Diversifying properties across multiple locations to smooth seasonality.
  • Blending short-term and long-term lets within the portfolio.
  • Maintaining cash reserves of at least three months’ operating expenses.
  • Securing robust insurance policies covering loss of income and property damage.

Case Study: Central London Serviced Apartment

An investor acquired a two-bedroom flat in Zone 1 in early 2023 for £600,000. After furnishing to a hotel-style standard at a cost of £20,000, the property achieved an average nightly rate of £200 with 75 percent occupancy. Annual gross revenue reached £109,500, generating a 16 percent gross yield before fees and expenses. Even after platform commissions and management fees, net yield remained above 10 percent—far exceeding traditional buy-to-let returns.

Is Short Term Lets Right for You?

For high-net-worth investors seeking to boost income, diversify risk and maintain usage flexibility, the short term lets model offers compelling advantages. Success requires thorough market research, professional management and diligent compliance. When executed correctly, short term lets can outperform many other residential strategies.

Next Steps

To explore bespoke short term lets opportunities and leverage our market expertise, please get in touch with TK Property Group or review our latest news articles for insights on upcoming projects and regulation updates.