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Long Lets vs. Short Lets: the pros and cons for landlords
When it comes to managing their properties, landlords in Malta and Gozo often find themselves at a crossroads when deciding between long-term leases and short-term rentals. Both options come with their own set of advantages and drawbacks, making it crucial for landlords to weigh their choices carefully. We look at the pros and cons from a landlord’s perspective.
LONG LETS: STEADY INCOME WITH STABILITY
Pros:
- Stable Income: Long-term leases typically offer landlords a steady stream of income, providing financial stability over an extended period. Knowing that rent is coming in reliably each month can alleviate financial stress.
- Reduced Turnover Costs: With longer leases, turnover costs such as advertising for new tenants, cleaning and repairs are minimised. Landlords can avoid frequent vacancies and the associated expenses.
- Less Management: Long-term tenants often require less hands-on management. Once a trustworthy tenant is secured, landlords can enjoy a more passive role in property management, freeing up time for other pursuits and this is one of the biggest draw cards of long lets.
- Lower Risk of Wear and Tear: Longer leases generally mean fewer tenant turnovers, resulting in less wear and tear on the property. This can translate to lower maintenance costs and less frequent renovations.
Cons:
- Limited Flexibility: Long-term leases can tie landlords into agreements for extended periods, limiting their flexibility to adjust rental rates according to market fluctuations or to reclaim the property for personal use. It is important that landlords make provision for possible unforeseen changes and this probability need to be noted in the lease agreement, but within the parameters of what is allowed by law.
- Potential for Bad Tenants: While long-term leases offer stability, they also mean landlords are committed to tenants for a longer duration. If a tenant turns out to be problematic, evicting them can be a lengthy and costly process.
- Market Changes: Economic and market conditions can change over the course of a long-term lease. Landlords may find themselves locked into rental rates that are below market value if property values in the area rise significantly.
SHORT LETS: FLEXIBILITY WITH HIGHER RETURNS
Pros:
- Higher Rental Income: Short-term rentals often command higher nightly rates compared to long-term leases, potentially resulting in greater overall income for landlords, especially in high-demand areas or during peak seasons.
- Flexibility: Short lets offer landlords greater flexibility to adjust rental rates, terminate agreements, or use the property for personal purposes with shorter notice periods compared to long-term leases.
- Opportunity for Property Use: Landlords can use short-term rental properties for personal use during periods of low demand, such as during off seasons or when the property is not booked by guests.
Cons:
- Higher Turnover Costs: Short-term rentals typically involve more frequent turnovers, leading to increased costs associated with cleaning, maintenance, and advertising for new tenants.
- Management Intensity: Managing short-term rentals requires more hands-on involvement, including guest communications, check-ins and addressing immediate maintenance issues, which can be time-consuming for landlords.
- Seasonal Demand: Short-term rental income may fluctuate seasonally, with periods of high demand followed by lulls. Landlords need to carefully manage their finances to account for variations in rental income.
- Legal and Regulatory Challenges: Short-term rentals may be subject to specific regulations and legal requirements, such as obtaining permits or licenses, adhering to zoning laws and complying with local tax regulations.
MAKE IT EASY FOR YOURSELF
At Frank Salt Real Estate’s Rentals Division we have a team of experts that can be invaluable in assisting you to make a decision of whether to go for long- or short-term rentals. We know the demand, we know the areas and the market conditions and we also have all the tenants you could wish for. So whether you are after the stability of long commitments or the excitement and financial gains that come with short turnarounds offered by the tourism market, contact us. We also offer a tailor-made property management service to landlords where we take charge of your rental affairs: we will find the tenants, we will collect the rent, we will pay the bills and we will look after the maintenance of your property for a very reasonable fee.
In conclusion, both long-term leases and short-term rentals offer unique opportunities and challenges for landlords in Malta and Gozo, but it all comes down to personal preference. Interested in having an obligation-free chat? Fill in the form below and we will get in touch with you at your earliest convenience.
