How the Renters’ Rights Act Is Accelerating the Move Toward Flexible Letting Models

Flexible letting combines short-, mid-, and long-term letting strategies to help London landlords adapt to the changing regulatory landscape under the Renters’ Rights Act while protecting rental income. Choosing the right letting approach depends on how each tenancy is structured and managed.

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 most directly affected by the RRA. Short-lets generally operate outside these provisions, while mid-lets may or may not fall within the Act, depending on the tenancy structure, duration, and legal agreement used.
• The income potential of flexible letting far exceeds that of long-term rentals, especially when the property is well managed.

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 rigorous enforcement, mandatory registration requirements (with costs borne by landlords), and tighter controls on tenancy management and rent increases.

All of these are prompting landlords, especially those using traditional long-term letting (Assured Shorthold Tenancies, or ASTs), to rethink their portfolios and consider selling to exit the PRS.

Did you know:

The English Private Landlord Survey, published by the UK government, found that 46% of small-scale retired landlords, 81% of moderate-scale business/investor landlords, and 78% of large-scale business landlords have considered leaving the Private Rented Sector due to recent legislative changes and tax increases.

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 primarily affects assured tenancies used for traditional long-term residential letting. By using a combination of strategies, including short-term accommodation and a carefully structured mid-term arrangement, landlords could diversify income while reducing reliance on a single-tenancy model.

Let’s take a look at how 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 world’s top destinations. Across City Relay’s managed short-let portfolio, average daily rates (ADRs) increased, resulting in a 16% YoY (year on year) growth in RevPAR (revenue per available room) from September to November 2025.

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, and relocating tenants.

Second, there’s 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.

1 – Higher income potential

While long-lets offer income stability, short-lets and mid-lets offer higher nightly rates and annual income potential.

Here’s an illustrative income comparison based on comparable City Relay-managed London properties with strong occupancy levels.

• 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

Actual performance will vary, depending on property type, location, occupancy, operating costs, and seasonal demand.

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.

For instance, instead of limiting a one-bedroom apartment in Marylebone to a £1,750 monthly long-let rate, it can earn £200 a night or £6,000 a month as a short-let during the summer tourism season. Then it can transition to a corporate mid-let during the quieter months, earning £2,500 a month. This approach helps reduce void periods while capturing the higher seasonal rates.

2 – Lower regulatory exposure

Most short-let accommodations fall outside the scope of the RRA tenancy provisions. Mid-term lettings require greater care, as some agreements may create assured tenancies depending on their duration, terms, and the structure of the occupation. Landlords should seek professional advice when setting up mid-term agreements to ensure they don’t fall within RRA provisions.

When structured correctly, flexible letting can reduce exposure to certain operational changes under the RRA while remaining fully compliant with planning, safety, licensing, and tenancy legislation.

3 – 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 offers several benefits, it adds complexity to rental operations. 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.

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. It’s not simply a temporary workaround. For many London landlords, it forms part of a long-term portfolio strategy that balances income generation, operational flexibility, and regulatory resilience while adapting to evolving market conditions.

Across City Relay’s portfolio, flexible letting allows many landlords to reduce void periods by transitioning between short-, mid-, and long-term demand throughout the year. Find out how you can use this letting strategy 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, enabling your property to achieve higher returns while remaining fully compliant. Get a free rental estimate now.