WHAT ARE THE KEY DIFFERENCES BETWEEN A SHORT LET AND LONG LET PROPERTY? PART 1

What are the Key Differences between a Short Let and Long Let Property? Part 1

Apart from the obvious differences, many a time, property owners who consider renting out their space wonder whether it would be better to use their property as a short-term (also known as a vacation rental) or long-term rental investment. Firstly, we believe that owners should consider their wants and needs, as well as factors such as returns, rental maintenance, and property usage when deciding to rent on a short or long-term basis. Nevetherless, 77 Great Estates understands that different people have different needs, hence we decided to take a closer look at the key differences between the two types of rentals to help you make the best decision for you and your lifestyle.

Short-Term Rental

A short-term rental is also referred to as a vacation or holiday rental property. It is the renting out of a furnished home or apartment or for a short period of time ranging from a few weeks to perhaps, a few months. The owner of the property will usually rent out on a monthly basis, but some vacation rentals offer nightly rates. This is usually typical of properties that are rented out to summer vacationers who visit Malta or Gozo.

The owner of the property usually rents their space when they’re not using it - though some rentals are shared spaces - especially during peak holiday seasons like in summertime, the festive season or for New Year's – when higher rates can be applied. Vacation rentals have surged in popularity in recent years for many reasons, especially because they often offer more privacy and space for a lesser cost when compared to hotels.

Advantages

Nowadays, short-term rental properties are popular for two main reasons: they’re cheaper than hotels for potential tenants and the landlord’s incomes are higher than long-term rentals. Then there’s the perk of flexibility: the owner can choose exactly when in each month their property will be made available to guests. Therefore, owners who want more of an opportunity to use their property often, prefer to rent on a short-term basis for this very reason.

Moreover, short-term rental owners can benefit from peak seasons, since generally they’re the most sought-after times of the year people want to rent a place. This means that if the property owner might not have a tenant for the entire year, the seasons in which the property will be occupied will make up for the months in which the place would be vacant.

Disadvantages

Of course everything isn’t all fine and dandy, because there’s the main disadvantage of not having a stable, monthly income, which is always something attractive to look forward to twelve times a year. Then there are many things to manage on a regular basis which tend to give someone who’s not up for the challenge a tad bit of a headache. Booking calendars, check-ins, check-outs and cleanings are all aspects to be taken into consideration if you, as a landlord intend on coordinating everything. So, if you’re not that fond of organising dates and timetables, think twice on a short-term rental.

Long-Term Rental

As opposed to short-term rentals, long-term rental properties come with considerably more stability, and consequently a more air-tight contractual agreement. Such rental properties usually cater for young couples or families who are either saving or still searching for their ideal home, but want to ensure living in a more permanent or ‘semi-permanent’ property they can call their own, even if not forever.

Advantages

With long-term rentals, the owner of the property rents out their accommodation on a long-term basis, typically receiving rent payments every calendar month. Of course, there can be a multitude of advantages to renting long-term. Firstly, there’s the fact that owners will be receiving rent payments monthly from the tenant, which automatically provides a predicted and consistent payment plan and income. This implies that the landlord can have a financial plan for a longer term.

Another big plus is monthly fees can be charged to the tenant directly, should the property require maintenance and so on, since to a certain extent, the property becomes the tenant’s responsibility. Obviously, this is always subject to the contract signed at the beginning of the rental agreement. However, as a general rule, the monthly utility costs are usually charged to the occupant.

Disadvantages

One of the main disadvantages property owners deal with when it comes to long-term renting is the fact that the owner often has lower flexibility choosing when to use their property. This is because the space is rented out for longer periods of time. In fact, the landlord must choose well in advance when the property can be used or not, which also determines the legally binding agreement that needs to be drawn up and signed prior to the long-term commitment between both parties.

Another drawback is the fact that, the number of tenants looking for long-term renting is much lower than the margin of guests looking to rent on a short-term basis, since many individuals - especially local residents, might look at the prospect of a long-term rental fee as somewhat of a waste of money. Lastly, there is the added challenge of finding a reputable tenant who ticks all the boxes when it comes to trustworthiness and honesty. Consequently, finding the ideal tenant who you feel comfortable renting out your property to over a long stretch of time can make you risk having the property vacant for long time spans, which means not generating that desired rental income.

Investing in real estate in Malta and Gozo can potentially present a Pandora’s box of intricacies that not every property investor might be aware of or knowledgeable enough to tackle. That’s why it’s always a good idea to entrust the task to an esteemed estate agency like 77 Great Estates. Our estate agents have been carefully selected and trained to make sure that each client’s needs are met to and catered to, to the tee.

So, if you have any queries about the ins and outs of property rentals, whether for short-term or long-term basis, we advise you to contact us. We’ll be more than happy to point you in the right direction.

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