If you are a landlord looking to let out your residential property, there are several elements you will need to consider. To receive a high rental income regularly, you will want to find a reliable tenant or group of tenants that will pay their rent on time. Landlords and tenants will enter an agreement with one another. This agreement, often called a tenancy agreement, is a legally binding contract that outlines the rights of both parties. The tenancy agreement states the tenant’s right to occupy the property, the landlord’s right to receive rent, and who is responsible for what.
As a landlord, one of the biggest decisions you must make is the length of your tenancy agreement. You may choose to operate on a short-term basis, welcoming a constant changeover of tenants. Alternatively, you may prefer to provide a property that a group of tenants will make their home for several months or years. Two common types of agreements include short-term let and assured shorthold tenancy, both of which have their own benefits.
TK Property Group is a property investment company that brings high-yield residential properties to investors around the world. One of TK’s current opportunities is Century Square in Manchester, a modern collection of apartments that will soon deliver new homes in an iconic Northern location. TK Property has worked on a diverse range of residential accommodation built for all kinds of rental arrangements, including short-term let and assured shorthold tenancy. They have provided helpful information on the differences between the two.
What Is a Short-Term Let?
A short-term let is an agreement to live in a property for a short period, such as a few days or weeks. These agreements are usually under six months. Short-let properties will normally be self-contained apartments with all furnishings and bills included. These properties are widely considered alternatives to hotels, and demand has risen significantly in recent years. A short-term let is a popular choice for people going on holiday or as temporary accommodation while finding a permanent home after relocating. It’s also common for business travellers and partygoers on a hen night or stag do.
If a tenant is looking for a short stay, anywhere from two nights to a month, short-term lets are the optimal solution. This agreement is far more affordable than booking a hotel room and provides a homely experience. There is likely to be greater freedom, more space and amenities like a kitchen and washing facilities within the apartment.
Airbnb is one of the most popular marketplaces where landlords can advertise their short-term let properties. With short-term lets, landlords usually benefit from higher rates and more flexibility in choosing when to let their property and when to leave it vacant. If there are any bad tenants, you can rest assured that they will leave the property soon without going through the eviction process. On the negative side, it can take more time, effort and maintenance work due to the high turnover of new tenants. There may also be dry periods where the property remains vacant. Bills usually covered by tenants, such as utilities, are often paid by landlords under short-term let agreements.
What Is an Assured Shorthold Tenancy?
An assured shorthold tenancy is the most popular tenancy agreement when renting a property. This agreement is a contract between both parties for the tenant to live in the rented property for a specified period. Assured shorthold tenancies usually run for fixed terms of 6 or 12 months, with a renewal option when the agreement has lapsed. If the agreement includes a break clause, the contract may be ended early as long as adequate notice is given. If there is sufficient reason, landlords can evict tenants by following the correct procedures. If there is sufficient reason, landlords can evict tenants by following the correct procedures that firstly include sending a pre-written eviction notice.
The tenancy agreement will state the landlord’s responsibilities, including how maintenance and repairs will be arranged. Landlords must give 24 hours’ notice before visiting the property and ensure the house complies with health and safety regulations. Tenants will often have the freedom to live how they want, including buying their own furniture and taking care of the utility bills. However, landlords may choose to limit tenants from decorating the property and prevent pets from living there.
In some situations, a property cannot be let under an assured shorthold tenancy agreement. This includes if the rent is more than £100,000 per year or less than £250 per year, the property is being let to a business, or the agreement commenced before 1989. If the property is only being let for holidays, it would also not fall under an assured shorthold tenancy agreement.
Which Tenancy Agreement Is Best?
Ultimately, the decision as to whether a landlord should opt for a short-term let or assured shorthold tenancy is entirely up to them. Both of these options are excellent opportunities and will deliver reasonable capital growth.
Short-term let is ideal if you want a frequent turnover of tenants and greater control. Short-term is a great way for homeowners to let out their properties before pursuing the challenge of long-term commitments. It can also be fantastic for people to let out a spare room that they’re not using, helping them earn more revenue on the side.
Assured shorthold tenancy, on the other hand, is best left to landlords who want committed tenants that aim to live in the property for at least six months. This long-term arrangement will guarantee a steady income without the hassle of tenants coming and going. You also won’t need to worry about picking up bills that tenants can manage.