For landlords, property investors and homeowners spending extended periods away, choosing between a short term and long term rental strategy can significantly affect annual returns.

Short term lets can generate more gross income than conventional tenancies in locations with strong demand. However, higher operating costs, changing occupancy, management requirements and local regulations mean that the most profitable option must be determined by comparing annual net income rather than headline revenue.

A successful strategy depends on the property, location, local demand, operating expenses and the owner’s financial objectives. There is no single model that will deliver the best result for every home.

At Domistay, we help landlords assess these factors through professional Airbnb management in London, combining local market knowledge, dynamic pricing, guest management and practical property operations.

What Is the Difference Between Short Term and Long Term Renting?

Before comparing returns, it is important to understand how the two rental models operate.

What Is a Short Term Rental?

A short term rental is usually furnished accommodation let for several nights, weeks or months. Bookings are commonly secured through platforms such as Airbnb and Booking.com.

Guests may include tourists, business travellers, contractors, relocating professionals, families visiting relatives and people requiring temporary accommodation.

The owner normally pays for utilities, broadband, cleaning, linen, household essentials and ongoing guest related costs.

Short term letting can provide greater flexibility and higher nightly income, but it requires more active management than a conventional tenancy.

What Is a Long Term Rental?

In England, most private long term tenancies now operate as assured periodic tenancies. These continue on a rolling basis, usually with rent paid monthly, until the tenant or landlord ends the tenancy through the appropriate legal process.

This model generally provides more predictable income and involves fewer guest turnovers. Tenants will also normally pay their own utilities and broadband.

Long term renting can offer greater stability, although the landlord has less flexibility to use or reposition the property while it is occupied.

Which Rental Strategy Produces More Income?

Short term lets often generate higher gross revenue in areas with strong visitor, business or temporary accommodation demand.

Consider a two bedroom property with a potential average nightly rate of £220.

At 70 per cent occupancy across 30 available nights, the calculation would be:

£220 × 21 occupied nights = £4,620 gross monthly booking revenue

The same property might achieve between £2,000 and £2,500 per month through a conventional tenancy, depending on its location, size, condition and local rental market.

On the surface, the short term model appears to produce substantially more income. However, gross booking revenue is not the amount the owner ultimately receives.

The comparison must account for:

• Platform charges
• Management fees
• Cleaning and linen
• Utilities and broadband
• Insurance
• Maintenance
• Replacement items
• Seasonal changes in occupancy
• Local planning restrictions

A property generating £4,620 in gross bookings may produce a much smaller advantage once all operating expenses have been deducted.

It is therefore more accurate to compare annual net owner income under each strategy.

Property owners can use the Domistay Airbnb revenue estimator to obtain an initial estimate of possible booking income.

The Operating Costs of a Short Term Rental

One of the most common mistakes new hosts make is comparing the nightly rate of a short let with the monthly rent from a tenancy.

This ignores the additional costs involved in providing furnished, serviced accommodation.

Typical short term rental costs include:

• Platform service fees
• Professional property management
• Guest communication
• Cleaning between reservations
• Linen supply and laundering
• Utility bills
• Broadband
• Maintenance and repairs
• Household essentials
• Replacement furnishings
• Specialist insurance
• Safety inspections and certification

Guest turnover can also increase wear on furniture, appliances, locks and decorative finishes.

Professional Airbnb management plans can reduce the owner’s workload while improving pricing, response times, guest satisfaction and operational consistency.

Domistay supports owners through services including:

• Airbnb pricing strategy
• Airbnb guest management
• Airbnb cleaning services
• Airbnb linen services
• Airbnb property maintenance

For owners seeking a more hands off investment, professional management can help transform the property into a more reliable source of Airbnb passive income.

The Operating Costs of a Long Term Rental

Long term rentals generally have fewer day to day operating costs.

Typical costs may include:

• Letting or management fees
• Landlord insurance
• Safety and compliance costs
• Repairs and maintenance
• Periods without a tenant
• Property licensing where required
• Inventory and check in services
• Costs associated with replacing a tenant

Tenants will usually pay their own utilities, broadband and council tax, subject to the terms of the tenancy and applicable rules.

Costs are often more predictable than under a short term model, although major repairs and periods without rental income can still affect the annual return.

Occupancy Is the Main Driver of Short Term Let Profitability

A high nightly rate does not guarantee a strong return.

A property charging £250 per night but achieving only six occupied nights each month may generate less revenue than a property charging £175 with consistently strong occupancy.

Occupancy is influenced by:

• Location
• Transport connections
• Property quality
• Number of guests accommodated
• Photography and listing presentation
• Guest reviews
• Seasonal demand
• Local events
• Pricing strategy
• Booking restrictions
• Minimum stay requirements
• Speed and quality of guest communication

Some properties may need occupancy in the region of 55 to 60 per cent to outperform the net income available through a conventional tenancy. However, there is no reliable universal break even point.

A property with a high long term rental value may require much stronger short term performance than a property with a lower monthly tenancy value.

This is why an Airbnb property feasibility assessment should be completed before the property is furnished, photographed or listed.

A Practical Short Term Rental Comparison

Consider a property that could achieve £2,200 per month through a long term tenancy.

Its annual gross long term income would be:

£2,200 × 12 months = £26,400

Now consider a short term strategy producing:

• Average nightly rate: £190
• Average occupancy: 65 per cent
• Available nights: 365
• Estimated occupied nights: 237

Estimated annual gross booking revenue:

£190 × 237 nights = £45,030

The short term model produces £18,630 more in gross revenue.

However, the owner must then deduct management, platform charges, utilities, cleaning, linen, maintenance, insurance and replacement costs.

If these expenses total £15,000, the estimated net short term income would be:

£45,030 less £15,000 = £30,030

The short term strategy would therefore produce approximately £3,630 more than the gross long term rental income before long term letting expenses are considered.

This example demonstrates why a large difference in gross revenue can become a much smaller difference in net income.

It is also important to note that this example would not ordinarily be achievable through year round short term letting of an entire London home without the required planning permission.

London’s 90 Night Rule

Whole residential properties in Greater London can generally be used as short term accommodation for no more than 90 nights in a calendar year without planning permission.

The limit applies to the cumulative number of nights the property is used as temporary sleeping accommodation, not simply the number of reservations accepted.

Owners considering short term letting should also review:

• Local planning requirements
• Lease or freehold restrictions
• Mortgage conditions
• Insurance terms
• Safety obligations
• Licensing requirements
• Council tax and business rates considerations

Airbnb automatically restricts many entire home listings in Greater London once they reach 90 booked nights unless the host provides evidence that the property has the necessary permission.

Owners should not assume that every booking platform applies the same restriction automatically. Local requirements should always be checked with the relevant council before the property begins operating.

Can London Landlords Use a Mixed Rental Strategy?

Some owners combine different forms of occupation across the year.

This might involve using permitted short term nights during periods of strong demand and considering longer accommodation arrangements during the remaining months.

Longer stays should not be treated as an automatic way to avoid short term letting restrictions. An extended booking can create different rights and responsibilities depending on how the property is occupied and the nature of the agreement.

Before offering longer occupation, landlords should consider:

• Whether the arrangement could create a tenancy
• Deposit protection obligations
• The correct occupation agreement
• Possession procedures
• Insurance and mortgage restrictions
• Lease conditions
• Local licensing requirements

A mixed strategy can be commercially effective, but it must be structured properly rather than treated as a simple extension of an Airbnb booking.

When Does Short Term Letting Make Sense?

Short term letting may be suitable when:

• The property is in an area with consistent demand
• The home is close to transport connections or major attractions
• There is demand from business travellers or contractors
• The property is well furnished and presented
• The owner wants to retain some personal access
• Dynamic pricing can be used effectively
• Professional management is available
• The likely net return justifies the additional operating costs

Demand can vary considerably between neighbouring areas.

Properties supported by Airbnb management in Greenwich may benefit from tourism, business travel, events and strong transport connections.

Homes requiring Airbnb management in Deptford can attract visitors who want convenient access to Greenwich, central London and the wider South East London area.

Demand for Airbnb management in Lewisham may come from leisure travellers, contractors, families and relocating professionals.

Properties in nearby residential areas may also benefit from specialist Airbnb management in Blackheath, particularly where larger homes and family accommodation are involved.

Owners with several apartments in the same development may also benefit from professional Airbnb block management, which can help standardise guest communication, cleaning, maintenance and property presentation.

When Might Long Term Renting Be Better?

A conventional tenancy may be more appropriate when:

• Short term demand is limited
• The property has a particularly strong long term rental value
• The owner prioritises predictable monthly income
• The lease prohibits short term accommodation
• Mortgage or insurance conditions restrict short letting
• Planning restrictions make the strategy impractical
• The property is not suitable for frequent guest use
• The owner does not want a more operationally intensive model
• The likely increase in net income is too small to justify the additional complexity

For some landlords, certainty is more valuable than achieving the highest possible gross income.

A stable tenancy may also support longer term investment planning because monthly income and operating costs are easier to forecast.

How to Compare Short Term and Long Term Returns

The decision should be based on a complete annual comparison.

Step 1: Estimate Short Term Revenue

Calculate:

Average nightly rate × estimated occupancy × available nights

Use realistic seasonal rates rather than applying a peak summer price to the whole year.

Step 2: Deduct Short Term Operating Costs

Include:

• Platform charges
• Management fees
• Cleaning and linen
• Utilities
• Broadband
• Insurance
• Maintenance
• Consumables
• Replacement items
• Safety and compliance costs

Cleaning income collected from guests should not automatically be treated as profit when it is used to pay the cleaner and linen provider.

Step 3: Estimate Long Term Net Income

Include:

• Annual rent
• Letting or management fees
• Maintenance allowance
• Insurance
• Compliance costs
• Expected periods without a tenant
• Licensing costs where applicable

Step 4: Account for Restrictions

Check whether short term letting is permitted under:

• Planning rules
• The property lease
• Mortgage conditions
• Insurance conditions
• Building regulations
• Local licensing requirements

Step 5: Compare Net Annual Returns

The additional short term income should be large enough to justify the increased operational work, variable occupancy and property wear.

At Domistay, we assess more than the headline difference. We consider the reliability of local demand, seasonal performance, property suitability and the owner’s need for personal access.

Short Term and Long Term Rental Comparison

Consideration	Short term rental	Long term rental
Income potential	Often higher in strong markets	Usually lower but more predictable
Occupancy	Variable and seasonal	More stable during a tenancy
Utilities	Usually paid by the owner	Usually paid by the tenant
Cleaning and linen	Required regularly	Usually limited to tenancy changes
Management	Frequent operational management	Less frequent day to day involvement
Property access	Greater flexibility between bookings	Limited while occupied
Furnishing	Normally fully furnished	May be furnished or unfurnished
Wear and tear	Can be higher due to guest turnover	Often more consistent
Regulation	Planning and local restrictions may apply	Tenancy legislation and licensing apply
Revenue certainty	Lower	Higher

Frequently Asked Questions

Is a short term rental more profitable than a long term rental?

It can be. A well located and professionally managed short term rental may generate more annual income than a conventional tenancy. The result depends on occupancy, nightly rates, operating costs, local regulations and the property’s long term rental value.

What occupancy rate is needed to outperform a long term tenancy?

There is no single occupancy target that applies to every property. Some homes may become competitive at around 55 to 60 per cent occupancy, while others may require substantially more. A tailored break even calculation should be completed using the property’s actual costs and rental values.

Are short term rentals legal in London?

Yes, but the use of an entire residential property as short term accommodation is generally limited to 90 nights per calendar year without planning permission. Owners must also check their lease, mortgage, insurance and local authority requirements.

Is professional Airbnb management worth the cost?

Professional management can be worthwhile when it increases revenue, protects guest experience and removes a substantial operational burden from the owner.

The fee should be evaluated against the additional income, time saved and level of service provided.

Can I switch between short term and long term renting?

Potentially, but each arrangement has different legal and operational requirements. Owners should ensure that the correct agreement, insurance, deposit arrangements and compliance procedures are used before accepting longer occupation.

How quickly can a property be prepared for short term letting?

The timescale depends on the property’s condition, furnishings, photography, safety requirements and platform setup. Domistay’s Airbnb property onboarding service helps owners prepare the property, organise the listing and establish the operational systems required before launch.

Short Term vs Long Term Rental: Final Verdict

Short term letting can produce higher returns when a property is located in a strong market, achieves consistent occupancy and is managed efficiently.

However, higher gross booking revenue does not always translate into substantially higher profit. Utilities, management, cleaning, linen, platform charges, maintenance and seasonal changes must all be included in the calculation.

Long term renting remains attractive for owners who value stable monthly income, lower operational complexity and fewer changes in occupancy.

The best strategy is therefore not the one with the highest advertised nightly rate. It is the one that delivers the strongest realistic net return while remaining suitable for the owner, the property and all applicable regulations.

Domistay can assess your property’s potential, compare suitable rental strategies and manage the complete short term letting operation on your behalf.

Use our Airbnb revenue estimator, request an Airbnb management consultation or contact our Airbnb management company to discuss your property’s earning potential.For more property owner guidance, visit the Domistay Airbnb management blog.