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Mid-term letting is a rental strategy that landlords can use to maximise the earning potential of their properties. According to a publication, the rise of mid-term stays was brought about by the lockdowns. Essential workers were forced to live remotely from their permanent homes to protect their loved ones from Covid-19. The uncertainty of the situation led to rental properties allowing them to lease properties for months at a time.
Now that the pandemic has lifted and people have gone back to their usual routine, mid-term letting continues to be in demand. Some digital nomads, in particular, have preferred mid-term stays over short-term ones.
What does this mean?
There’s a market for mid-term letting. If you want to diversify your rental strategy, this is a great option to consider.
In this article, you’ll learn more about mid-term letting and how you can use it to maximise the rental yields from your properties.
What is Mid-Term Letting?
Mid-term letting refers to lease agreements that fall between short-term and long-term rentals. At City Relay, our mid-term rentals are booked for 3 to 6 months. Anything less is considered a short-term stay or a long-term tenancy.
This is increasingly popular in London, especially for anyone who needs to stay for more than 3 months but doesn’t want to be tied to a 6-month-long lease. It attracts a market looking for fully furnished yet flexible accommodations. It’s ideal for business travellers sent to London for a couple of months. It’s also appealing to families who have to relocate while renovating their primary homes. Mid-term rentals can also attract international students – especially those who are only on short courses.
With flexibility being an important requirement for people, mid-term letting offers the sweet spot in terms of accommodations.
Pros and Cons of Mid-Term Letting in London
Before you decide to use mid-term letting as an option for your rental property in London, define the advantages and disadvantages first.
With short-term letting offering peak earning potential and long-term rentals providing a steady stream of income, what can one expect from mid-term rental properties?
Pros of mid-term letting
In the rental property market, the shorter the lease, the higher the nightly rate would be. Although mid-term letting doesn’t offer the same income potential as shortlets, it does have a higher rental yield compared to long-term letting. This is mostly because apartments are fully furnished. Most guests and residents are willing to pay more for that convenience. This can increase your rental yields.
Another benefit is the lower vacancy rates. Mid-term rentals are occupied for at least 3 months at a time. This assures you of a steady rental income during those months. If you’re consistent with your marketing, it’s possible to keep the property occupied shortly after the other lease is up. This stable occupancy allows you to maximise the rental returns from the property.
With occupants staying for only 3 to 6 months at a time, they’ll be more responsible and respectful of your things – compared to short-term guests. After all, if they damage something, they’ll be the ones inconvenienced by it. And with every guest turnover, you get the chance to check the property for damages and do preventive maintenance in the process.
Finally, this offers flexibility, not just for guests but also for the property owner. If you need the property for personal use, you can block off dates and make sure nobody’s renting during that time. This also opens the property to family and friends who may want to use it as well.
Cons of mid-term letting
One of the drawbacks of using mid-term letting is the fact that it’s not as popular as shortlets and long-term rentals. There are legal grey areas since some regions don’t have specific regulations for mid-term rentals. This means you have to look at housing regulations as a whole to make sure your operations are fully compliant. The same is true for tax regulations. If you don’t work with property experts, you might make mistakes that could lead to penalties and legal issues.
Property management is another concern if you decide to use mid-term letting. It’s still more transient compared to long-term rentals. The main responsibility of caring for the property is still under the property owner. You need to consider how to check in and check out guests, clean the property in between and provide maintenance services when necessary. This requires a reliable management system so you can keep the guest happy.
Insurance should also be customised since there’s no specific package for mid-term rental properties. Talk to your insurance provider so you can discuss the specific needs of the property so you stay compliant and protected in the event of a disaster.
Tips to Maximise Rental Yields Through Mid-Term Letting
Using mid-term letting as your strategy can be very rewarding as long as you can maximise the rental yields it can provide. It attracts a different market so you have to understand their preferences so your property can meet those needs. This will increase the appeal of the property and keep occupancy rates high.
Here are other considerations that’ll help you maximise mid-term letting rental yields.
Make sure the location has a market for it
Prior to using mid-term letting, do a thorough research of the market demand in the area. If the property is in the suburbs, people might prefer long-term rentals. But if the property is near universities, business hubs or even public transport leading to these places, the demand for mid-term letting may be high.
Look at the local rental market and focus on the profitability and demand for mid-term rentals. Make sure it’s an area where your target market would want to live in.
Use dynamic pricing strategies
Adopting dynamic pricing strategies allows you to adjust rental rates based on seasonality, market demand, etc. This requires a constant eye on market conditions so you can identify peak and off-peak periods. You need to adjust the price to balance the demand with occupancy rates. Among the peak seasons in London include the summer season or the start of the school year (if you’re targeting the student population). You can also leverage local events especially if it will bring people to the city (e.g. Olympics).
There are tools you can use to automate this. If you partner with property management companies like City Relay, they can help you create effective dynamic pricing strategies to increase your monthly rental yields while keeping your property competitive.
Offer the right amenities
Mid-term guests or tenants have a specific preference when it comes to accommodations. They value convenience and comfort but they also like flexibility. Consider these as you create a list of amenities to offer.
So if your target market includes business travellers, digital nomads and students, they would want high-speed internet and a work/study space. You should also provide comfortable furnishings, sustainable toiletries and a fully-equipped kitchen.
These will increase the appeal of your mid-term rental to increase occupancy rates and rental income.
Highlight property features appealing to your market
Marketing your property would require you to highlight the features that your target market holds valuable. For instance, a business traveller would prefer modern interiors and proximity to business centres. A family would want security features installed and a functional kitchen. Students want a quiet space to study and access to universities and public transport.
Take professional photos that highlight the features appealing to your target market. Write a description that’ll enumerate what the property can offer – including the local community and neighbourhood amenities.
Be legally compliant (rules and regulations, taxes, insurance)
Although there are no specific rules and regulations for mid-term letting, there are still legal responsibilities for landlords. Comply with the regulations stated in the Housing Act 2004. You should also be compliant with the fire and gas safety rules. The same is true for energy efficiency and other certificates that’ll make your property safe as a temporary accommodation.
Insurance coverage should also be dealt with. This will protect your rental property and compensate you in the event of accidents and disasters.
Set up a system for property operations
Come up with a system to have seamless property operations. The experience of your guest will depend on this. From handling inquiries to performing regular maintenance and attending to emergency concerns, set up a way to address these needs. Don’t forget the housekeeping services and 24/7 communication channels to stay connected with guests, too.
This improved tenant satisfaction reduces the chance of problems and negative reviews. This will make it easier to enjoy maximum occupancy rates and rental yields.
Partner with the right property management company
One of the most convenient ways to maximise rental yields of mid-term rental properties is by partnering with a reputable property management company like City Relay. This can be a game-changing strategy that’ll maximise the earning potential of your mid-term rental property.
City Relay offers a full package of property management services. From marketing the property to providing housekeeping and maintenance services to tenant vetting and guest relations support, City Relay takes care of everything – even legal compliance and dynamic pricing strategies.
With the help of a reputable property management company, you can get both expertise and experience to your advantage. You can also benefit from City Relay’s high trust rating by association. People will see the trustworthy reputation of City Relay and your property will be known for the excellent guest services that come with it.
Get Help from the Best Property Management Company
Property investors can benefit from mid-term letting but it has to be approached strategically. While it opens several opportunities to maximise rental yields, you have to understand what makes it an ideal accommodation option. Whether it’s business travellers or students, the demand for mid-term letting is rising and the market is getting saturated. If you decide to use this letting strategy, you have to make your property stand out to increase occupancy rates.
By partnering with City Relay, you can enjoy a well-managed property that’s occupied by reliable tenants. We’ll use dynamic pricing strategies to maximise the mid-term rental’s earning potential. Our expertise and experience allow us to offer tailored solutions to property owners like you – and we can introduce flexible letting as a way to combine different letting strategies to further increase your rental returns.
If you’re ready to explore the earning potential of your properties, contact us. We’ll help you figure out the best letting strategy for your property portfolio.
