Short Term vs Long Term Rental: Which Strategy Generates Higher Returns?

Choosing between a short term and long term rental can make a considerable difference to what your home earns and how you use it. Short term letting can deliver higher booking revenue and more flexibility, while long term renting usually offers steadier monthly income and fewer day to day demands. The better option depends on what remains after costs, the time your home is available and the rules that apply to it.

For homeowners and landlords comparing short term vs long term rental options, a realistic annual comparison is a useful starting point. At Domistay, our approach to Airbnb management considers your home’s earning potential alongside its running costs, local demand and your own plans, so the strategy works for you as well as the numbers.

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

A short term rental typically provides furnished accommodation for visitors staying a few nights or weeks, with bookings often made through Airbnb or Booking.com. Guests might be on holiday, travelling for work or visiting family, and they generally expect utilities, broadband, linen and everyday essentials to be included. This creates opportunities to adjust prices and leave dates available for your own use, but it also requires regular cleaning, guest communication and ongoing attention.

A long term rental provides someone with a home rather than accommodation for a visit. In England, the tenancy reforms introduced on 1 May 2026 moved most private assured tenancies onto a periodic basis, meaning they continue without a fixed end date. The government’s guidance for landlords explains the current rules. Tenants usually arrange their own household bills, while owners remain responsible for repairs and their landlord obligations.

Which Rental Strategy Could Earn You More?

A well presented home with strong visitor demand can earn more through nightly bookings than monthly rent. However, a high advertised nightly rate tells you very little without knowing how often it is achieved. Seasonal demand, gaps between reservations and dates reserved for your own stays all affect annual booking income, so a forecast should reflect the whole year rather than the busiest few weeks.

Costs also need to be compared consistently. Short lets involve platform charges, management fees, utilities, cleaning, linen and supplies, alongside insurance, maintenance and replacement furnishings. Long term rentals still carry letting fees, repairs, insurance, compliance costs and possible gaps between tenants. The useful measure is annual income after operating costs on both sides, followed by the impact of your financing and tax position.

A Short Term vs Long Term Rental Income Example

To illustrate the difference, imagine a home receiving £2,200 a month through a tenancy, or achieving an average £190 nightly rate across 237 short let nights. That represents approximately 65% occupancy across 365 available nights. The example assumes year round short letting is permitted; it is not a forecast for a London home operating under the usual 90 night allowance.

In this example, short letting produces £7,630 more after operating costs. Both cost allowances are hypothetical and should be replaced with estimates for the particular home, including applicable VAT on services and council tax or business rates where payable by the owner. The long term calculation assumes twelve months of rent received; any vacancy or unpaid rent would reduce it. Mortgage payments, tax and initial furnishing or setup costs are excluded from both columns.

Cleaning charges also need consistent treatment. Here, gross short let income excludes separately collected guest cleaning charges, and the cost allowance includes any cleaning or linen expense left for the owner after those charges are applied. A guest cleaning payment used to pay a supplier is not extra profit, and the same expense should not be deducted twice.

What Makes a Home Suitable for Short Term Letting?

Location, presentation and pricing work together. Transport connections, local attractions and demand for business or temporary accommodation can help a home attract bookings, while thoughtful furnishings, clear photography and reliable guest support help it compete. Our work in Airbnb management in Greenwich, for example, considers the home’s location and likely guest audience when shaping its listing and approach.

There is no universal occupancy percentage at which short letting becomes more profitable. A home with high running costs or a strong long term rental value needs a different calculation from one with lower expenses. An assessment of your home’s short let potential should account for realistic nightly rates, available dates and seasonal demand before you commit to furnishing or launching it.

Flexibility, Workload and Your Plans for the Home

Short letting can suit owners who spend time away and want to earn from a home they still use. You can plan personal stays around available dates, although confirmed bookings must be honoured and holding back popular periods will affect potential income. Professional management can handle the frequent operational work, from responding to guests to coordinating cleaning and maintenance.

Long term renting may be a better fit when regular monthly rent matters more than access to the home, or when the potential short let return does not justify the additional costs. It usually involves fewer changes of occupant, but rent is not guaranteed and repairs still need attention. You also need to plan around the tenant’s rights and the legal process for recovering possession, rather than assuming the home will be available on a particular date.

How London’s 90 Night Rule Changes the Comparison

In Greater London, the usual planning exemption allows residential premises to be used as temporary sleeping accommodation for up to 90 nights per calendar year, provided its conditions are met, including council tax liability. Beyond that allowance, planning permission is required. The government confirmed this position in its June 2026 answer on London short lets. The allowance applies across bookings, so using multiple platforms does not create additional permitted nights.

This makes your intended use particularly important. Letting a London home while you are away is a different financial proposition from operating accommodation throughout the year, and a forecast should reflect the permitted use. Lease terms, lender consent, insurance and local requirements also need checking before launch. Outside Greater London, check the relevant council’s planning position rather than assuming every home can operate without restrictions.

Some owners consider a mix of short visits and longer occupation, but a longer booking should not be treated as an automatic exemption from planning or tenancy requirements. The agreement and actual use of the home need to be assessed, including any deposit obligations and possession rights. A mixed approach needs to fit those requirements as well as the owner’s calendar.

Finding the Right Approach With Domistay

At Domistay, we look beyond a headline revenue estimate to understand whether short letting is a suitable choice for your home. We consider availability, local demand, presentation and operating costs, then manage the practical work of listings, pricing, guest communication, cleaning and maintenance coordination. The aim is a well managed home and a clear understanding of what it earns.

Our management plans start from 12% plus VAT, depending on the plan and availability. We calculate management commission on booking revenue after platform fees, exclude cleaning fees from that calculation and adjust our commission when the relevant booking payout is reduced. This gives owners greater transparency over the relationship between their earnings and our fee.

If you are weighing up short term vs long term rental income, our Airbnb revenue estimator offers a starting point for potential booking revenue. You can also book a consultation with Domistay to discuss your home, its availability and the approach that best suits your plans.

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