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Key Takeaways:
- Flexible letting offers a solution to London landlords struggling with the Renters’ Rights Act restrictions.
- The London rental market is resilient enough to ensure a steady flow of rental income for landlords, provided they remain fully compliant.
- Traditional long-term rentals are affected mainly by the RRA. Switching to short and mid-term letting may ease the burden of compliance.
- The income potential of flexible letting far exceeds long-term rentals—especially when the property is managed well.
Flexible Letting: Protect Rental Income Under the RRA
The passing of the Renters Rights Act (RRA) 2025 has led London landlords to ask: How can my rental income stay strong while ensuring compliance with the new regulations?
The RRA is bringing significant changes to the Private Rented Sector (PRS), including the abolition of Section 21, more vigorous enforcement, mandatory registration requirements (with costs borne by landlords), and tighter controls on tenancy management and rental rate increases.
All of these are causing landlords, especially those using traditional long-term letting (Assured Shorthold Tenancies or AST), to rethink their portfolios and consider selling to exit the PRS.
Did you know:
A government survey revealed that landlords are considering leaving the Private Rented Sector due to changes in the law and tax increases. –TheNegotiator.co.uk
While the RRA brings greater risks and operational challenges for landlords, it does not diminish income opportunities in the PRS. London still enjoys a high demand for rental accommodations, and stepping away might lead to greater losses.
Instead of leaving the PRS, London landlords might be better off changing their letting strategy.
And the best option right now is flexible letting.
Why Flexible Letting is Best for London’s Current Market
Flexible letting combines short and mid-term rental strategies to maximise rental revenue without committing to long-term agreements.
The RRA mostly affects long-term rental structures. By adopting flexible letting strategies, landlords can continue earning from their properties without being restricted by the new regulations.
The current property market, specifically with the new laws, strengthens the appeal of flexible letting.
First, there is a strong demand for shortlets and midlets. The short-term demand, in particular, remains high as London continues to be one of the top destinations in the world. With ADRs (average daily rates) increasing year on year, shortlets have the potential to generate significant rental revenue.
Not only that, the demand for midlets is increasing, creating a new market for landlords. This is fueled by corporate travellers, remote workers, digital nomads, relocating tenants, etc.
Another issue is the pressure on long-term rental profit margins. The compliance costs associated with the RRA, the limit on rent increases, longer notice periods, and the higher risk of arrears can compromise long-term rental profitability.
Finally, flexibility is ideal for an uncertain market that’s still adjusting to the RRA. The ability to switch from short-term to mid-term letting allows landlords to adapt their strategy to comply with regulations. They won’t feel locked into a long-term agreement that might no longer be profitable due to new policy shifts.
It also allows them to maximise rental income through dynamic pricing strategies. And if they decide to just sell their property, it would be easier to grab the opportunity.
3 Benefits of Flexible Letting
The London PRS is shaped by uncertainty, which makes flexibility a strategic choice for landlords. This will bring several benefits to their portfolio.
Higher income potential
While longlets offer income stability, shortlets and midlets offer higher nightly rates and annual income potential.
- Short-term rentals: £188 to £200 per night, £50,000-£66,000/year
- Mid-term rentals: £85 to £115 per night, £31,000-£41,000/year
- Long-term rentals: £70 to £80 per night, £26,000-£28,000/year
There’s also a chance to raise nightly rates during peak seasons, something you can’t do with long-term rentals. This increases the income potential of shortlets and midlets.
Lower regulatory exposure
Midlets and shortlets are not covered by the Renters’ Rights Act, so they won’t be affected by tenancy period changes, restricted repossession grounds, and other rent controls.
Even if the RRA is fully implemented, there won’t be legal risks. Flexible letting can also work around the 90-day limit of shortlets by using midlets as an alternative letting strategy.
Greater control and liquidity
Through flexible letting, you can retain control and liquidity of your rental property. Shortlets and midlets won’t tie your property to long-term leases. This means you can use the property if you wish and schedule buyer viewings if you want to sell it.
Sticking to short-term letting also allows you to keep your property in the market. Once you reach the 90-day limit, and the property market is not ideal for a property sale, you can also switch to mid-term letting.
This way, your property continues to earn.
Flexible letting and professional management
While flexible letting brings several benefits, rental operations add complexity. If you are too busy to handle it, you can partner with a property management company like City Relay.
Get end-to-end property management services that provide the following:
- Professional onboarding and photography
- Multi-platform marketing
- In-house cleaning and maintenance
- Dynamic pricing strategies
- Guest/tenant communication and support
- Regulatory compliance
Having professional support allows you to unlock the full potential of your rental property while you focus on reaching your portfolio goals.
FAQs: Selling vs Renting Your Property in London
Is flexible letting allowed in London after the RRA’s implementation?
Yes, flexible letting is allowed in London. This letting strategy allows landlords to switch between shortlets and midlets, thereby operating outside the RRA’s provisions.
As long as the property meets the local housing standards and complies with the local planning rules and safety regulations, it can operate in London.
But remember, shortlets and midlets also have their own local regulations to comply with. Shortlets, in particular, should follow the 90-day limit in London, where they cannot rent out their property for more than 90 days in a calendar year.
Read more about flexible letting: How Flexible Letting Can Maximise Your Rental Income in London.
Is flexible letting exempt from other regulations, other than the RRA?
Flexible letting combines all three letting models: short-term, mid-term, and long-term letting. If the property is used for long-term letting, it will be subject to the RRA provisions. Short-term rentals also have a 90-day limit, which London is currently enforcing strictly.
Other than that, all rental properties should comply with the local housing and building planning regulations. Properties should also meet the safety checks (electricity, gas safety, and EPC) and the licensing requirements of their local council.
City Relay can help with rental property compliance. Read about Compliance and Risk Management and how it boosts profitability.
Is flexible letting suitable for all London rental properties?
Ideally, all rental properties can use flexible letting as long as they meet the local council’s housing and licensing requirements. However, you should also consider the location, layout, and market demand.
If the property is near a university, a business hub, or a tourist hotspot, you can use flexible letting since your property will attract the shortlet and midlet market.
Read more about Mid-term letting in London.
Flexible Letting is the Future for London Landlords
The Renters’ Rights Act is intended to balance the rights of tenants and landlords, but it’s causing landlords to struggle with new operational costs and rental restrictions. But with the right letting strategy, landlords can keep the effects of the RRA to a minimum.
Flexible letting is the perfect solution to keep your rental income flowing without fear of the RRA. This letting strategy combines short, mid, and long-term letting. If the landlord is still in the process of complying with the RRA, they can switch to short or mid-term letting in the meantime. This ensures new rental restrictions won’t compromise the rental income.
Find out how you can use flexible letting to secure your property’s income potential and improve regulatory resilience.
City Relay offers flexible letting management services to London landlords. We can help unlock the full benefits of flexible letting so your property can enjoy higher returns while remaining fully compliant. Get a free rental estimate now.
