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Can short-term letting help you stay profitable even after Section 21 is abolished?
Yes, it can.
The ban on Section 21 is part of the provisions of the Renters’ Rights Bill once it passes into law. It will keep landlords from using the no-fault eviction on their tenants. While this will keep tenants secure, it puts landlords at risk. They might have a harder time dealing with problematic tenants.
If you use long-term letting as your strategy, the Section 21 abolishment might compromise your property’s profitability as it makes evictions harder to implement.
Fortunately, there’s another letting strategy that can help you navigate the new landscape brought by the Section 21 ban. Short-term letting uses a model that allows you to maintain control over your rental property while maximising your rental income without worrying about evicting problematic tenants.
In this article, you’ll learn more about short-term letting, specifically the reasons why it’s the perfect strategy for landlords of long-term rental properties. You’ll get a deeper understanding of how it can protect your rental business from the risks that follow after the abolishment of Section 21.
The Impact of Section 21 Abolishment on Landlords
As the private rental sector braces for the major changes the Renters’ Rights Bill will bring, there’s a growing concern over long-term letting profitability. Property owners and landlords are starting to protect themselves from the effects of the Section 21 or no-fault eviction ban. Reports reveal that more landlords have evicted tenants or ended lease agreements last October to December 2024, showing the highest rate of no-fault evictions since 2016.
If you’re a long-term rental landlord, reassess your lease agreements and reconsider your letting strategies to ensure profitability and flexibility. Make sure it won’t compromise your property’s earning potential even as Section 21 is abolished.
Some landlords may be thinking of leaving the private rental sector – but that may not be necessary as long as you can switch to another letting strategy, like short term letting. It can help landlords like you stay profitable and adaptable to market demands.
4 Ways Short-Term Letting is The Perfect Strategy
Short-term letting refers to renting a property for days, weeks or a few months, usually no more than 90 days. Instead of long-term tenants living in your property for at least 6 months to a year, you’ll be renting out to short-term guests. These people come from different walks of life, with some being travellers with family or friends and others professionals or digital nomads.
Using this letting strategy allows you to enjoy specific benefits that would alleviate any concerns after Section 21 is abolished.
Higher rental income
Short-term rentals charge higher nightly rates compared to long-term letting. The lack of steady income justifies the higher rental rate. Although the housekeeping and maintenance needs are greater, it can be added to the booking fee to increase the property’s earning potential. If the property is in a tourist hotspot or high-demand location, you can command even higher rates.
Even if there are occasional vacancies, the earning potential will still be greater than long-term lease agreements.
Greater control and flexibility
Since short-term rentals are booked for only a couple of days, weeks or months, it’s easier for landlords to control the property’s availability and keep it flexible. Unlike long-term lease agreements, you can’t use the property for as long as the lease is still in effect. With short-term letting, there’s no need to worry about the abolishment of Section 21. If you need your property, you can block off dates so guests can’t book the dates.
This control and flexibility allows you to enjoy your property and keep it available for personal use.
Lower risk of problematic guests
Most short-term guests won’t stay long enough to cause significant damage to the property. Even if there are, the housekeeping and maintenance checks between bookings will reveal the damages – allowing you to deal with the issues to avoid major repair costs.
There’s also a lower risk of tenant-related disputes and no need to worry about late rental payments, property neglect, etc.
Market adaptability
The rental property market is incredibly volatile. Long-term lease agreements keep you from adapting to the changes in market conditions. It gets even harder due to increased regulations. Short-term letting, on the other hand, allows you to change your rental strategy and maximise your property’s earning potential based on market demands.
It’s also easier to use dynamic pricing strategies as rental fees can change from one booking to another. This will also improve the rental revenue of properties to take advantage of peak or off-peak seasons.
How to Start Implementing Short-Term Letting
Switching from long-term to short-term letting requires strategic planning to maximise profitability, ensure compliance and attract a steady flow of bookings. If you’re planning to use short-term letting to keep profits high after the Section 21 abolishment, there are 6 things you need to do.
- Understand local regulations. Short-term letting follows different rules and regulations compared to long-term rentals. For instance, shortlets are only allowed for 90 days, unless the property owner secures planning permission. Make sure the property meets the safety and health regulations (e.g. fire safety, liability protection, shortlet insurance, etc).
- Optimise the property. Guests rely on photos, videos and reviews before making a booking decision. Improve your property’s visual appeal by upgrading the furnishings and decor. Invest in high-quality linens, towels and beddings. Provide kitchen essentials, modern appliances, Wi-Fi and smart home tools. These will improve the property’s appeal to attract more bookings.
- Set a competitive pricing strategy. Maximise your short-term rental’s revenue potential by researching similar listings and determining the baseline pricing. Use dynamic pricing tools to adjust rental rates and take advantage of seasons, local events and demand movements. Be ready to offer discounts and promos to encourage longer stays or early bookings.
- Use an effective marketing and listing strategy. List your property on short-term letting platforms like Airbnb, Booking.com, etc. Invest in professional photography to get the best marketing materials to promote your property. Write a compelling description that highlights the property’s unique features, amenities and location. Encourage guests to leave reviews by offering incentives.
- Operate efficiently and elevate the guest experience. Set up an efficient property management process for cleaning, maintenance and other housekeeping tasks. Include a reliable communication system to meet guest expectations and improve satisfaction levels.
- Partner with a property management company. Look for a reliable and reputable company to streamline operations and deal with the time-consuming property management tasks. They have the manpower and expertise to handle the daily property operations, keep it compliant and ensure maximum occupancy and profitability.
Use Short-Term Letting to Stay Profitable
As you wait for the Renters’ Rights Bill to be implemented, consider the changes you need to make to stay compliant with the new regulations. If you think your profitability will be threatened by the abolishment of Section 21, consider using short-term letting as an alternative strategy.
Being proactive with your letting strategy helps you stay competitive and protective of your investment.
If you’d like to explore the benefits of short-term letting, get in touch with City Relay. Find out how to use this powerful strategy to increase your property’s earning potential amidst the changes in the private rental sector in London.
Contact us to discuss tailored solutions that’ll help you switch to short-term letting in a stress-free way.
