Short Term Lets vs Long Term Lets: Which Makes Investors More Money in 2026?

Last updated: 5 November 2026

If you have bought an investment property, or you’re about to, a decision is waiting for you on completion day: how are you going to let it? The short term lets vs long term lets question splits investors neatly in two. One camp loves nightly rates, owner stays and yields that look like typos. The other loves a rent that lands on the same day every month without anyone having to change the bedding.

Here’s the good news: both work. The right answer depends on the property, the location and how the investment is set up, and 2026 has moved the rules for both strategies more than any year in recent memory. This guide sets out the real numbers (net as well as gross), what has changed, what’s coming in 2027, and how to decide which route suits you.

Short Term Lets vs Long Term Lets at a Glance

Short Term Lets vs Long Term Lets: The 2026 Numbers

Let’s put the same flat through both strategies. Our example is a one-bedroom new-build apartment in Greater Manchester bought for £188,000, the same unit we used in our guide to gross yield vs net yield, so you can read the two side by side.

Gross income

Gross is where most comparisons stop, and where most of the confusion starts. A short term let costs a lot more to run, so here’s the same flat after running costs.

Net income (before mortgage costs and tax)

Even after handing over roughly half its revenue in running costs, the short term let produces about twice the net income of the long term let in this example.

What occupancy does a short term let need?

In this example, the short term let overtakes the long term let at around 45% occupancy, roughly 165 nights a year. That’s the line we want a location to clear comfortably, not scrape past.

Illustrative projections, not guarantees. Short let costs modelled at 45% of revenue (platform 15%, management 15%, utilities and bills 12%, cleaning 3%) plus a £1,000 maintenance and replacement allowance. Long term let costs: 12% management plus a 5% maintenance and voids allowance. Service charge and insurance of £1,500 a year assumed for both. Excludes one-off furnishing, mortgage interest and tax.

Long Term Lets: The Case For Them

Long term letting isn’t the poor relation in this comparison. It’s a different return profile, and for many investors and many properties it’s exactly the right one.

A good tenant in a good property can stay for years, paying a predictable rent with very little input from you. There are no nightly bookings, no seasonal swings and no platform fees, and with a reputable letting agent in place your involvement can be close to zero.

Since 1 May 2026, tenancies in England run as assured periodic tenancies under the Renters’ Rights Act 2025, and Section 21 has gone. In practice, if you buy a well-located property and reference tenants properly, very little changes for you, which is the point we make in Renters Rights Explained and How to Be a Good Landlord.

When weighing up short term lets vs long term lets, long term letting tends to win where the investment case rests on deep tenant demand and capital growth rather than nightly income. Our London developments The Moxon in High Barnet and Claremont Quarter in Cricklewood are built on exactly that, as is the landmark development, The Forge in Liverpool.

Short Term Lets: Why the Income Is Higher

For the right property in the right place, short term letting earns more because guests pay a premium for flexibility. Someone booking two nights for a concert, a week for a contract or a fortnight between house moves will pay far more per night than a tenant pays per day on a twelve-month let.

That premium comes from leisure and business travel, event weekends, seasonal peaks and a growing preference for serviced apartments over hotel rooms. It’s why One Trafford Edge in Manchester, 350 metres from the Trafford Centre and less than a mile from Manchester United’s planned new stadium, is forecast to deliver gross yields of over 15%.

Location is everything here, and some cities support both strategies. St George’s Terrace in York sits inside the city walls and is short let approved, in a city with more than 8 million visitors a year, over 40,000 students and a growing professional population. Apartments start from £335,000 with a projected gross yield of 10%, and completion is expected in Q4 2027.

Holiday Lets: The Coastal Version of the Same Strategy

Short term letting isn’t only a city-centre play. Holiday lets in established resorts follow the same principles, and completed stock means income from day one rather than after a build period.

The Maycliffe in Torquay is a good illustration: 25 fully refurbished studios on the English Riviera, already operational and professionally managed by My Property Host.

Torquay welcomes around 4.5 million visitor trips a year, and nearly 89% of visitors come back. Because those yields are quoted net, the running costs covered below are already accounted for.

What Changed in 2026, and What’s Coming in 2027

Four changes matter most to the short term lets vs long term lets decision right now.

The official detail sits in the government’s guidance on letting a self-catering holiday home in England. Planning rules vary too: in London, letting a home short term for more than 90 nights a year needs planning permission, and some councils use Article 4 directions to control short lets locally. A separate planning use class for short lets (C5) has been proposed but isn’t in force.

New property income tax rates also apply from April 2027, to both strategies equally. If you’re deciding how to hold the property, our guide to buying property through a limited company covers the current rates.

The Critical Question: Is the Development Actually Approved?

This is where a lot of short let plans fall over before they start. Many leases prohibit short term letting, some building management companies restrict Airbnb and Booking.com, and some council areas need planning permission the developer hasn’t obtained. Discovering any of that after completion is an expensive surprise.

Before committing to a short let strategy on any property, check three things: the lease explicitly permits short term letting, the management company has no restrictions, and the local authority doesn’t require separate permission. From March 2027, add registration to that list.

Every development we present as short let approved carries documented developer approval and the right lease provisions before it reaches an investor. It’s not a verbal assurance. If we say a development is short let approved, it is.

Management: Where Returns Are Won or Lost

Short letting only feels complicated without the right manager. A professional operator handles guest messages, check-ins, cleaning, linen, maintenance, listings and reviews, so your involvement is reading the monthly statement.

The biggest difference between a good operator and an average one is dynamic pricing: adjusting nightly rates to demand, events, seasons and competitors using tools such as PriceLabs or Beyond. A flat £115 a night undercharges on a sold-out concert weekend at Co-op Live and overcharges on a wet Tuesday in February. Dynamic pricing gets both right.

We introduce investors to vetted local management partners for short and long term lets, so management is lined up before the property completes. You can see the full range in our investor services.

The Real Costs of a Short Term Let

Any honest comparison of short term lets vs long term lets has to count every cost, because this is where headline yields and real returns part company.

The reason short letting still comes out ahead in the right locations is simple: the gross income gap is wide enough to absorb these costs and leave more behind. Every Providence Wealth investor looking at a short let approved development gets a full cost-inclusive forecast showing gross income, every running cost, net income and net yield.

The Flexibility Benefit

One thing that never shows up in a yield figure is personal use. A long term let belongs to your tenant for as long as they live there. A short let can be blocked out whenever you like, for your own break or for family and friends during quieter weeks.

It’s rarely the main reason to choose short letting, but owning a seaside studio you can actually stay in, as owners at The Maycliffe can, is a pleasant bonus.

Short Term Lets vs Long Term Lets: Which Is Right for You?

Whichever way you lean, the one approach we’d always steer you away from is choosing on gross yield alone, without the costs, the management and the approval position in front of you.

How Providence Wealth Helps You Choose

We don’t push one strategy. We match the property and the letting route to your goals, then show you the numbers behind it.

• Director-level due diligence. Every development is reviewed by a director before it reaches a client, including the short let approval documents.
• Real numbers on every call. A cost-inclusive forecast for a specific unit, short let and long let side by side, rather than a brochure headline.
• Hands-off from reservation onwards. We introduce you to trusted mortgage brokers, solicitors and short or long term management partners.
• Free limited company setup if buying through a company suits your plans.

Further Reading

How Off-Plan Property Investment Works: A Complete Investor Guide

Regeneration Zone Property Investment: How Smart Investors Build Serious Wealth

How to Build a Property Portfolio: 5 Steps to Long-Term Wealth

Can You Get a Mortgage on an Off-Plan Property? A Buy-to-Let Investor’s Guide

Alternative Investments UK: What Every Serious Investor Should Know