Switch From Short Term Lets To Long Term Lets
Step 1 - Check your free instant rental valuation here.
Step 2 - Arrange a free no-obligation bespoke rental valuation and advice visit by us
Step 3 - Complete our new instruction Terms of Business
Step 4 - Let us arrange everything for you to bring the property to market and find new tenants
Step 5 - Sit back and enjoy 'stress free ownership' forever!
Why Should I Consider Long Term Lets?
As a Short Term Let owner and operator in Edinburgh, you will no doubt have been watching with great interest the various events of the last year surrounding the introduction of the new Short Term Let Licensing laws. Despite intense pressure and criticism from representative bodies and organisations within the tourism industry, the new laws came into effect on 1st October 2023.
Put simply, in Edinburgh, unless you have applied for both planning permission (or a Certificate of Lawfulness) and a Short Term Let licence before 1st October 2023 you can no longer operate your property as a Short Term Let.
This blog page will provide answers to the most typical questions we have received from many operators who, like you, are trying to weigh up their options. For most, this boils down to either selling, or switching to Long Term letting. We explore the differences, pro's and con's for each below.
Alternatively, if you'd like to read more about the back story on how and why the regulations have come into force, then please go to our information page here.
Short Term Lets (STL) -V- Long Term Lets (LTL). What Are The Main Differences?
Rental Values
Short Term Lets are typically assumed to command higher rents than Long Term Lets. In Edinburgh this is often the case during the August festivals and summer months, but significantly less so in the winter 'shoulder' months. January to March can be very low income months indeed for Short Term Let properties.
Long Term Lets on the other hand offer a steady monthly income which is maintained throughout the year at the same rate. This removes a lot of the uncertainty associated with Short Term Lets as a Long Term Let landlord can be reasonably confident of what their income will be in any given month well in advance. Whereas Short Term Let operators are often operating at very short notice as to when their next guests, and income, will be arriving.
Every property is different, and you will already know the average income for your own property as a Short Term Let operation.
To find out the potential rental value as a Long Term let - just use our free instant valuation tool here or just get in touch with us to have a free
Costs
This is where Long Term Lets have a significant advantage over Short Term Lets as the majority of costs are either simply not required or are the responsibility of the tenants.
To help illustrate, here are some of the main differences between the two;
| Short Term Let | Long Term Let | |
|---|---|---|
| Gas & Electric | Owner cost | Tenant pays |
| Council Tax | Owner cost | Tenant pays |
| Wifi | Owner cost | Tenant pays |
| TV Licence | Owner cost | Tenant pays |
| Cleaning (General) | Owner cost | Tenant responsibility |
| Cleaning (bedding/towels) | Owner cost | Tenant responsibility |
| Welcome packs | Owner cost | Not required |
| Maintenance | Owner cost | Owner cost |
| Inventory/ Furnishings | Main items, decorative pictures, home furnishings, full kitchen inventory etc. | Only main items |
| Mortgage | On a commercial level rate | Buy to let rate |
| Insurance | Higher if holiday home | Lower for Buy to Let |
| Management fees | up to 20% + VAT (service providers) | 10% + VAT (letting agent) |
| Portal Booking fees | Varies: 3 - 25% | None |
| Administration | Varies | None |
Safety Certificates
These should be the same for both types of property, but because there is a requirement for Long Term Let landlords to register as a landlord, part of that declaration requires the Landlord to confirm that the relevant safety certificates are in place. The Scottish Government has suggested that concerns over safety related items in Short Term Lets have been some of the main drivers behind the new Short Term Let regulations becoming law from 1st October 2023.
The certificates required are;
- Gas Safety Certificate
- Electrical Installation Condition Report
- Portable Appliance test
- Legionella Risk Assessment
- Smoke Alarms and Heat Detection System (interlinked)
The 'Hassle' Factor
Most owners of Short Term Let properties who have switched over to Long Term Lets have told us that the main difference that they have noticed is the sudden lack of worry and stress they had about their property.
They have cited reasons such as worrying about voids, sometimes very demanding guests, issues with cleaners in between tenancies, mixed up bookings and dual bookings (nightmare!), dogs and pets they didn't know about, broken items not reported by the last guests and complained about by the new guests (washing machine door handle!), lost keys (empty keybox!), neighbours complaining, and the list goes on. Sound familiar!?
Whereas, the new 'stress-free ownership' experience is one which most switchers hadn't fully appreciated until after they'd made the switch to Long Term Lets. Suddenly, most of those issues no longer exist, and those which do are now someone else's problem to deal with (ours!).
Legislation and Regulations
It was inevitable at some point that the unregulated Short term Let sector would see some kind of registration and legislation coming into force. It may well have come in with more force than was expected, or arguably warranted, but it's here now and not going away again.
Most of the new Short Term Let regulations have been a core part of the Long Term Let sector, or Private Rented Sector as it is better known, for many years. This has ensured that properties are well cared for, safe, secure and that owners, agents and indeed tenants all have a solid legal framework to keep everyone's interests balanced and protected.
There are currently circa 175 pieces of legislation governing Long Term Lets. The necessity for Short Term Let owners to suddenly be aware of, and comply with a similar load is also a strong reason many are looking at switching to Long Term Lets to stay ahead of the legislative curve.
Judicial Reviews
It's worth covering here that there has already been one Judicial Review on the City of Edinburgh Council's original Short Term Let policy, the outcome of which cause it to ruled unlawful and it was subsequently changed. The same council's Planning Guidance on Short Term Lets requiring planning permission to gain a change of use to allow them to continue operating is also due for a Judicial review on the 8th November 2023.
The first review had a high expectation of being successful before it took place. However, planning is a much more nuanced matter as every property has its own unique characteristics. Whilst may Short Term Let owners are hoping for a similar successful outcome, the legal profession is much more split as to which way it may go. If there was a jury, which there isn't in a Judicial Review, then it would almost certainly be 'out' on this one! Watch this space.
Conclusion
Both Short Term Lets and Long Term Lets have their own pro's and con's. However, when the regulatory playing field is suddenly levelled up, as the new laws have certainly caused, then the balance is probably equally as level in most cases.
Every owner will need to look at their own particular property in its own right, but for help advice and guidance on any of the above matters then we'd love to hear from you.