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Long-term letting is a type of rental strategy focusing on lease agreements lasting 6 months or more. It’s the opposite of short-term letting where properties are rented for as short as 1 night to 90 days.
When it comes to getting higher rental income, property experts would tell you to consider short-term letting since it brings higher nightly rates. However, you shouldn’t write off long-term rentals because of that.
Long-term rentals or LTRs offer several benefits that include hassle-free rental income and financial stability.
In this article, you’ll find out why long-term letting is a rewarding letting strategy for property owners. You’ll get a deeper understanding of the LTR market and how you can improve your property’s rental income potential through it.
The Long-term Rental Market in London
Before we discuss the benefits of long-term rentals, take a look at the state of the market – specifically for long-term lease agreements.
Although short-term rentals have grown steadily over the years, long-term letting continues to thrive in London. One study followed the growth of shortlets in Airbnb and longlets in Zoopla and revealed that the annual data of Zoopla is still 7x more than active Airbnb listings.
When the pandemic hit, there was a massive shift in response to the lockdowns as shortlets were converted into longlets. According to Rightmove, there was a 105% increase in new long-term rentals in 2020 compared to the same time in 2019 (data specific to Edinburgh).
After the pandemic, some longlets converted back to shortlets – but the demand for long-term letting is still high. Zoopla reported that the high demand and low supply kept rental prices rising to 3%-4% in 2024 – and it will continue to do so until 2025. This is consistent with the data from Rightmove where they tracked a 3.7% increase in the average rental price in the Greater London area this 2024.
What does this tell you? The demand and the high rental prices make long-term letting a lucrative market for rental property owners.
5 Benefits of Long-Term Letting
Although shortlets provide higher nightly rates, long-term rentals offer a hassle-free rental income. Familiarise yourself with the benefits of using long-term letting so you can decide if it’s the strategy that’ll help you meet your portfolio goals.
Consider these 5 benefits you’ll get if you turn your rental properties into longlets.
Consistent Rental Revenue
The primary benefit of long-term lettings is consistent rental revenue – at least for the next 6 months or so. The longer the lease agreement, the more you can be assured that you’ll get rental revenue.
Once the tenant is secure, you can look forward to receiving fixed rental income every month. As long as the contract is valid and nobody has violated its terms, the payment will keep coming every month.
This consistency remains secure despite seasonal fluctuations or market volatility.
Less Risk of Payment Delays
A long-term lease agreement is a legally binding contract between you and the resident. This is why long-term residents usually go through a vetting process before the lease is finalised. As the property owner, you can only approve reliable and qualified tenants – specifically those who are less likely to default on their payments. This is another level of assurance for you.
While there may be rare occasions when payments are delayed, it will be very minimal. This will give you peace of mind that your property is in good hands.
Lower Vacancy Rates
Due to the long lease period, you can lower the vacancy rate of your rental property. If you’re lucky enough to find a responsible tenant, they can lease your property for years. This low turnover means you don’t have to worry about keeping the property occupied and earning each month.
Once the tenant signs the lease, you won’t feel the stress of looking for occupants or the cash flow gaps that vacancies bring. There’s also no need to market the property as the income generated will remain uninterrupted throughout the lease term.
Predictable Cash Flow
If you’re relying on rental income for your monthly cash flow, you’ll feel more secure with long-term letting as your strategy. It’s easier to manage your finances because of the predictability that longlets bring. It’s not affected by the volatile market or the seasonal fluctuations. Whatever rental income is stated in the lease agreement, that’s what you’ll get.
This makes it easier to plan your finances – specifically when it comes to mortgage payments, property maintenance, compliance costs, etc.
If you plan to grow your investment, it’ll be more convenient to make long-term plans because of the stability of the rental income.
Minimal Management Costs
Long-term rentals don’t have frequent turnovers like shortlets. This means minimal management costs. You don’t have to spend resources to market the property (unless the long-term resident decides to move out). There’s also no need to hire housekeeping services to clean the property in between bookings.
Most long-term lease agreements put some of the maintenance responsibilities on the resident. You’ll only have to worry about the structural integrity of the property and the compliance checks. While any major repairs will be your responsibility as the landlord, it won’t cost as much as short-term rentals.
The expenses will only rise when the long-term resident moves. It gives you the chance to repaint the property and upgrade so you can get a better rental price when the next resident moves in.
Maximise Long-Term Rental Income
If you prefer a hassle-free rental income, long-term letting is the right strategy for you. It offers a more stable and consistent flow of income because it has a higher occupancy rate. There are also minimal management tasks and maintenance costs. This leads to financial stability and freedom to focus on growing your property portfolio.
Are you interested in learning more about long-term letting? City Relay specialises in managing rental properties so you can enjoy a steady flow of income with peace of mind. We’ll handle everything from sourcing tenants and collecting rent to maintaining the condition of the property. If you’d like to transform your property into a long-term rental, contact us today. We’ll help unlock the full earning potential of your property.
