If you own a property and are considering renting it out, you might be torn between the flexibility of listing on Airbnb or the stability of a long-term rental.
Both options come with their own set of advantages and challenges, and the best choice often depends on your goals, lifestyle, and property location.
In this article, we’ll explore the key differences between Airbnb and long-term renting, focusing on financial returns, costs, management, and market demand.
Understanding the Basics: Airbnb vs Long-Term Renting
- Airbnb (Short-Term Letting): Properties are rented for days, weeks, or up to a few months, often catering to tourists, business travellers, or digital nomads. Hosts can adjust pricing dynamically and have the flexibility to use the property personally when needed.
- Long-Term Renting: Properties are leased to tenants usually for a minimum of six months. They provide landlords with a steady monthly income and tenants with a stable living arrangement. Agreements typically involve legal contracts such as an assured shorthold tenancy (AST). Advertising is usually done through property portals like Rightmove, Zoopla, or local letting agents.
Comparing Income Potential
Airbnb
- Higher Daily Rates: Short-term rentals often generate higher revenue per night compared to monthly long-term rents.
- Seasonal Variability: While high-demand periods like summer and holidays can be lucrative, quieter months may lead to lower occupancy rates.
- Dynamic Pricing: Hosts can adjust prices based on demand, such as charging more during major events, peak periods or seasonal occasions.
Long-Term Renting
- Steady Income: Renting to tenants provides a reliable monthly income, making it easier to budget.
- Less Variability: Demand for rental properties is stable, especially in residential areas like Heaton, Gosforth, and Jesmond.
Running Costs: What to Consider
Airbnb Costs
Running an Airbnb can be more expensive due to the need for guest-ready amenities and frequent upkeep. Typical annual costs include:
| Expense | Avergae Annual Cost |
|---|---|
| Cleaning | £1,500–£4,000 (based on frequent turnovers and professional cleaning fees at £30–£50 per session). |
| Utilities | £2,000–£3,500 (hosts typically cover utilities, which can be higher due to constant guest turnover). |
| Maintenance/Repairs | £1,000–£2,000 (frequent usage of the property increases wear and tear). |
| Furnishings/Decor | £500–£1,500 (annual updates or replacements for damaged items). |
| Management Fees | £1,500–£5,000 (if using a property manager; typically 12–20% of revenue). |
| Insurance | £500–£1,000 (short-term rental insurance costs more than standard landlord insurance). |
| Platform Fees | 3%–15% of revenue (Airbnb charges a service fee on bookings). |
| Marketing/Photography | £100–£500 (one-off or occasional updates to marketing materials). |
| Regulatory Compliance | £200–£500 (licensing, fire safety checks, or other local requirements). |
Total Estimated Annual Costs:
£7,300–£18,000 (depending on property size, bookings, and use of professional services).
This total excludes the platform fees as they will be unique to each booking.
Long-Term Renting Costs
With long-term tenants, costs are typically lower and more predictable:
| Expense | Avergae Annual Cost |
|---|---|
| Utilities | £0 (tenants typically pay for utilities). |
| Maintenance/Repairs | £500–£1,500 (lower than Airbnb due to less frequent turnover). |
| Furnishings/Decor | £200–£500 (optional for unfurnished lets). |
| Insurance | £300–£500 (landlord insurance is cheaper than short-term rental insurance). |
| Regulatory Compliance | £200–£1,000 (EPC certification, gas safety checks, and other landlord obligations). |
| Letting Agency Fees | £500–£1,500 (8–12% of annual rent if using a management service). |
Total Estimated Annual Costs:
£1,700–£5,000 (depending on use of letting agents, void periods, and property condition).
Management Effort
Airbnb
Short-term letting requires active management:
- Frequent guest communication, check-ins, and reviews.
- Scheduling cleaning and restocking supplies.
- Marketing and maintaining an attractive online listing. Property management software or outsourcing to local Airbnb management companies can ease the workload, but these services typically charge 15–20% of rental income.
Long-Term Renting
Long-term rentals involve less day-to-day effort:
- Tenant selection and referencing at the start of the tenancy. Luckily, letting agents can make this stress-free with effective tenant finding services.
- Periodic property inspections and addressing maintenance requests. Again, you can take this off your plate by getting a local letting agent to manage your property for you.
Legal and Regulatory Considerations
Airbnb
- Some local councils impose restrictions on short-term lets. For example, the “90-day rule” in London limits the number of days a property can be rented out.
- Mortgage agreements and leasehold terms may prohibit short-term letting – review both your mortgage and lease agreements.
- Regular homeowner insurance may not cover short-term lets. You’ll need a specialist short-term rental insurance policy to protect against guest-related risks, such as accidental damage or liability claims.
- Airbnb has its own refund and cancellation policies, but you may want to establish additional terms.
- You may also need Public Liability Insurance which covers injuries or damages suffered by guests while staying in your property.
- You may need an EPC rated E or above to legally rent out your property. However, holiday lets rented out for less than four months a year or under a licence to occupy may be exempt. Always check specific requirements.
Long-Term Renting
- Landlords must adhere to the Housing Act 1988, conduct Right to Rent checks, and ensure the property meets EPC standards (minimum rating E, going up to C in 2030).
- Additional responsibilities include protecting deposits in a government-approved scheme and providing a gas safety certificate.
- You’ll need a buy-to-let mortgage or consent from your mortgage provider if you want to rent out your home.
Market Insights: Newcastle and Tyneside
As local property experts in Newcastle and Tyneside, we thought we would weigh in on the debate from a local perspective. Explore how the unique characteristics of the Newcastle and Tyneside property market influence the decision between short-term Airbnb rentals and long-term letting.
Airbnb Opportunities
- Tourist Appeal: Areas like the city centre, Jesmond, Quayside, and Ouseburn are hotspots for tourists and business travellers, commanding high nightly rates on Airbnb.
- Event-Driven Demand: The city’s vibrant culture, two universities and popular football team mean that regular local events can see spikes in bookings.
- Challenges: Seasonal fluctuations and potential local restrictions on short-term letting can impact occupancy.
Long-Term Rental Opportunities
- Student Tenants: Jesmond and Heaton are hotspots for students and young professionals, offering consistent demand.
- Family and Professional Tenants: Suburbs like Gosforth and Tynemouth attract families and professionals seeking long-term homes.
- Reliable Returns: With Newcastle’s growing population and strong rental demand, long-term lets provide steady income with fewer management demands – average monthly rents in Newcastle (£1,013) provide steady income for landlords.
Making the Right Choice
Choosing between Airbnb and long-term renting depends on your goals:
- Consider Airbnb if: Your property is in a high-demand tourist area, and you’re comfortable managing guest turnover and potentially higher costs.
- Consider long-term renting if: You prefer stability, less hands-on involvement, and a consistent income stream.
Need Help Managing Your Rental Property?
At Mansons Property Consultants, we specialise in helping landlords across Newcastle and Tyneside manage their properties efficiently and profitably. From tenant screening to full property management services, we’re here to ensure your investment works for you.
Contact us today to discuss your property and explore how we can help you achieve your goals, or find out more about our landlord services in Newcastle.
Let’s take the hassle out of managing your rental property together.
