Holiday-Letting vs Long-term Letting in Edinburgh

The Rise of Holiday-Letting in Edinburgh

Edinburgh is one of the most popular cities in Europe for holiday lets. This will come as no surprise to anyone who lives in, or has visited, Scotland’s capital. AirBnB has triggered the creation of a whole industry of holiday let landlords and this new sector is rapidly maturing. New niche businesses are popping up to support holiday let activities and large investor landlords are entering the market by buying up hundreds of rental properties in Edinburgh. The downside to Edinburgh residents are clear; parts of Edinburgh’s City Centre have lost their local communities as whole blocks that were once home to long-term residents have been taken over by holiday visitors. There has been a dramatic effect on the private long-term rented sector in Edinburgh as the rise of the holiday letting industry has taken much needed housing stock out of the long-term rental and home-owner market. Rents are rising faster than ever and house prices are also being pushed upwards as a result. Edinburgh council has recognised the problem and more measures are on the way to add to the rules the council has already introduced to try to reduce the levels of Edinburgh’s housing stock that appears on AirBnB and other letting portals.

What’s it like to be a Holiday-let Landlord?

Many landlords are turning their backs on holiday lets and deciding instead to rent their properties long-term. This is because of the amount of hassle involved in holiday letting (admin, bills, cleaning, linen, key handling & concierge-style support) and the difficulty in making it pay. 40%-45% of holiday letting income is spent on the running costs of a holiday let, assuming a high occupancy level, and then there is the increase cost of mortgage finance and insurance due to the higher risk of holiday letting compared to long-term letting.

Holiday-letting vs Long-term letting

Switching from holiday letting to long-term letting is easy and has many advantages. The main benefits of long-term letting are:

  1. The tenants pay the bills. No more paying for gas, electric, council rates, Wi-Fi, TV license, cleaning or linen. All of these costs are covered by the tenant in a long-term let.
  2. Predictable, easy income. The same rent every month without having to respond to booking enquiries.
  3. Low hassle. The average tenancy length in Edinburgh is over 2 years so the end of tenancy process where the inventory needs checked, the flat possibly needing cleaned (at the tenant’s expense) and new tenants found and screened happens once every couple of years compared to once a week with holiday letting.
  4. Reduced Risk. With long term letting you have the same tenant for a number of months or years and you credit check and reference these tenants before they move in. With holiday-letting you have a different guest(s) every week with their belongings moved in and out regularly and these guests don’t see the property as a long-term home for themselves so less likely to take good care of the property.

So, is it worth it?

A well-run holiday let can work out to be slightly more profitable than long-term letting (less than you would think) but this only works out to be financially more attractive if, as a landlord, you place a low value on your own time. The time and energy commitment of a holiday let is huge. In holiday letting, things rarely go wrong during the day, mid-week – it tends to be evenings and weekends when holiday letting landlords are called into action. This makes holiday letting a very big commitment that financially is rarely worth it.