When you’ve bought a property to let out and you’re figuring out your rental plan, one thing you’ll have to decide is whether to offer 12-month or six-month lets. It’s not a straightforward decision to make, so I’ve put together the pros and cons of short- and long-term lets to help you.
Pros of short-term lets / Cons of long-term lets
The main advantage of letting out your property for six months at a time is that you have far greater flexibility. Therefore, if you feel like you’re not compatible with your tenant and are having lots of problems with them, you don’t have to renew the contract and can find another person to fill their place.
This also enables you to let out your property for a short amount of time while you decide what you want to do with it and you don’t have to commit to the tenancy for a lengthy period; for instance, you might choose to sell or do some renovation work on your asset after the contract has come to an end, in which case you don’t have to wait an entire year to do so.
You might also find that by offering short-term lets, you can demand more money. As tenants often take up six-month lets when they are in desperate need for somewhere to live, you can demand more money for the property. Most people who take up short-term lets are professional businessmen and women, who are willing to pay more for a comfortable place to live that they can call home for a few months. The alternative to these types of lets is staying in a hotel, which is far more expensive, so you can raise your rental prices to compete with hotels.
Cons of short-term lets / Pros of long-term lets
While there are many benefits of short-term lets, there are also several disadvantages. For instance, you could find yourself having to replace your tenant every six months. If you manage the property yourself, it can demand a lot of your time and attention having to advertise your flat or house regularly.
Alternatively, you might have a letting agents looking after your asset, in which case, if they have to continually promote your property, you may have to spend a considerable amount of money on steep fees. This could be balanced with higher rental charges if your property is regularly filled; however, if there are long periods of time it is left empty, you might find the renal income isn’t enough to cover your lettings agents fees and give you a substantial profit.
While you may have to ask for a lower rental price for a 12-month let than a six-month one, you could earn more in the long term, as you can be certain it will be filled for at least a year.
You may also get more flexibility with a short-term let, but you lose familiarity with your tenants and a reliable and regular income. If you don’t have any intentions of selling your property in the near future or don’t need complete access to it in a few months, having regular 12-month contracts that roll over could be the best option for you, as you don’t have to worry about the asset for months on end while still receiving a rental income.
What’s more, if you have tenants that enjoy living in your property, you will find they are reliable with their payments and treat your asset well. They may even make improvements to your home, ensure your facilities are up to scratch and constantly maintained, and keep you informed as to any changes or damage to the property.
There are many things to think about when choosing to let your asset for a short period of time or a long one, so it’s important not to take this decision lightly. While 12-month contracts offer you financial security and peace of mind, the gamble of renting your flat or house for six months at a time could earn you a considerable amount of money if it consistently stays occupied.
Natasha Al-Atassi is a property investment writer for Select Property, collating the latest news about property investment opportunities, as well as updates on the Select Property brand and information to help investors interested in buying real estate.