Every landlord asks this before they ask anything else, and most articles on the subject are written to arrive at one answer. This one is not. There are real cases where a long tenancy earns more than a short let, and we would rather tell you which ones than pretend the answer always points the same way.
What a nightly rate actually has to cover
The comparison people make first is nightly rate times 365 against monthly rent times twelve, and short lets win that comparison easily. It is also the wrong comparison, because a short let does not sell 365 nights.
A short let has to cover:
- Voids between bookings. Some nights simply do not sell, especially outside the highest-demand months, and a night unsold is a night that earns nothing.
- Cleaning and turnaround time. Every changeover costs money and takes a property off the market for part of a day, which is time it cannot be booked.
- Management. Running a short let well is closer to running a small hospitality business than being a landlord: guest messages at all hours, pricing that moves with demand, cleaners booked and checked, damage sorted out. Most owners pay someone to do this, typically a percentage of revenue, commonly in the range of 15% to 18% depending on how much is included.
- Utilities, council tax or business rates, and consumables. A long tenancy generally has the tenant paying utilities and council tax directly. A short let has the owner paying for all of it, on every stay.
- The 90-night limit. In Greater London, letting a whole property short-term is capped at 90 nights a calendar year without planning permission. That is not a soft guideline, it is the basis on which the whole short-let market in London legally operates. We have written about it in full elsewhere on this site, but the short version for this comparison is: a London property cannot be short-let full-time and stay within the rules. It is either short-let for part of the year or it has planning permission for continuous use as short-term accommodation, which is not simple to get.
A long tenancy has none of that overhead. Rent is rent, paid monthly, for as long as the tenancy runs. The comparison that actually matters is not nightly rate against monthly rent. It is net income across a year, once every one of those costs is taken out of the short-let side.
Where the short let genuinely wins
None of this means the short let loses. It usually does not, in the parts of London where demand supports it, and for reasons that are specific rather than general.
The nightly rate carries a premium a monthly rent never will. A flat that would let for a certain monthly rent on a standard tenancy can often earn considerably more than that same month's worth of rent when sold night by night to visitors, especially in areas with tourist or business demand. This is the entire basis of the short-let market: the premium exists because guests are paying for flexibility and a furnished, serviced stay, not because the property is worth more.
The premium is not constant, and that is fine within the 90-night cap. Because the property only needs to be let for part of the year to stay inside the limit, the practical strategy is to sell the highest-demand nights at the highest rate and leave the rest of the year for something else. A long tenancy cannot do that. It is one rate, all year, whatever the season.
A long tenancy has voids too, and they are more expensive. Between tenants there is often a gap while the property is marketed, referenced and prepared, and during that gap the property earns nothing at all while still costing council tax, utilities and possibly a mortgage. A short let's voids are usually a night here and there. A tenancy's void is usually measured in weeks.
Where the tenancy genuinely wins
This is the part most short-let content leaves out, and it is true often enough to matter.
A property with weak short-let demand earns weak short-let income, full stop. Not every London postcode has tourist or corporate demand strong enough to fill nights at a premium rate. Outside the areas with genuine visitor or business traffic, a flat can sit with a high nightly rate and low occupancy, which nets out to less than a tenant would have paid every month without fail.
Management cost eats a bigger share of a small number than a large one. A modest short-let income after a management fee, cleaning, utilities and voids can end up close to, level with, or below what a straightforward tenancy would have paid, particularly on a property that needed a manager doing everything because the owner was not local or not willing to run it themselves.
A tenancy is far less work and far more predictable. This is not a small thing. Rent arrives monthly, guest turnover is not a daily concern, and the owner is not exposed to a booking calendar that can be quiet for reasons entirely outside their control, a slow month for tourism, a competitor undercutting on price, a listing that drops down search results. Predictability has a value landlords often underweight until they have lived without it for a year.
Leaseholds and mortgages can rule it out before the maths even starts. Many London leases restrict or ban short-letting outright, and standard buy-to-let mortgages often do not permit it either. Where that is the case, the entire comparison is academic. We cover both of those in more detail elsewhere on the site, but they are worth checking before comparing the income at all.
Seasonality decides more than either side admits
London short-let demand is not flat across the year. There are months where nightly rates and occupancy both run high, and quieter months where the same flat earns much less per night and takes longer to fill. A tenancy income does not move with the seasons at all.
This cuts both ways. In the strong months, a short let can comfortably outearn a tenancy. In the weak months, run the same flat as a short let and it may earn less than the tenancy would have paid for that month, once cleaning and voids are accounted for. The properties that do best on short lets tend to be run flexibly: short-let through the strong months, and a longer let, whether a full tenancy for part of the year or a medium-term corporate let, to cover the rest. That approach also happens to sit comfortably inside the 90-night cap, since the short-let portion of the year is naturally limited.
The honest way to work out which one is right for a specific flat
There is no single answer that applies to every London flat, and anyone offering one is guessing. What actually decides it, property by property:
- Whether the location has real short-let demand: tourism, business travel, events, or proximity to a hospital, university or transport hub with a constant flow of arrivals.
- Whether the lease and mortgage permit short-letting at all.
- What management would actually cost, given how hands-on the owner is prepared to be.
- Whether the owner values predictable income over a higher but variable one.
- Whether a mixed year, short-let for part of it and a longer let for the rest, suits the property better than committing to one model.
What we would tell you if you asked
We manage short lets, so we have a stake in this. We would still tell a landlord with a flat in an area with thin visitor demand that a tenancy is very likely to earn more with far less effort, because it is true and because a client who finds that out from us after a bad year is not a client we keep. Equally, we would tell a landlord sitting on a flat in a strong-demand area with a lease that permits it that they are very likely leaving money on the table with a standard tenancy.
The only way to know which category a specific flat falls into is to look at the flat: the postcode, the lease, the mortgage, and what similar properties nearby are actually achieving.
If you want that answer for your property rather than a general one, send us the postcode and we will tell you honestly which side of this it falls on.
This article describes how the two models generally compare and is not financial or legal advice. Your lease, mortgage terms and personal tax position all affect the real numbers for a specific property. Check your lease and mortgage conditions before letting short-term, and speak to an accountant about how either model affects your tax position.