If you own a property in the UK and are weighing up whether to let it out on Airbnb or sign a long-term tenancy agreement, the numbers can look deceptively simple on the surface. A well-located two-bedroom flat in London might bring in around £2,500 per month on a standard assured shorthold tenancy (AST), while the same flat could generate between £4,000 and £6,000 per month on Airbnb during peak season. That gap is enough to make anyone think the choice is obvious. But I’ve been watching this market closely for years, and the question I hear most often isn’t about gross revenue — it’s about what actually ends up in your pocket after costs, taxes, and the inevitable quiet months. The answer depends far more on your property’s location, your tolerance for hands-on management, and a major tax change that took effect in April 2025 than on any headline figure.
That revenue premium of 60 to 80 per cent in London sounds compelling, but it only tells part of the story. The real picture involves occupancy rates that can dip below 55 per cent in a slow season, running costs that can be eight times higher than a standard let, and a tax landscape that shifted dramatically this year. Here’s what you actually need to know.
How occupancy and costs determine your real return
The single most important number in this decision isn’t your nightly rate — it’s your occupancy rate. A long-term let achieves near-100 per cent occupancy, minus maybe two to four weeks between tenancies, giving you an effective rate of 95 to 98 per cent. That predictability is valuable. With Airbnb, the break-even occupancy — the point at which your short-let income matches what you’d earn from a long-term tenant — typically falls between 55 and 65 per cent for most UK markets. If you can sustain occupancy above 70 per cent, Airbnb starts to outperform. Below 55 per cent, you’re almost certainly better off with a standard tenancy.
What I tend to notice is that new hosts underestimate how long it takes to build momentum. In the first three to six months, it’s common to achieve only 40 to 50 per cent occupancy, even in strong markets, because you’re building reviews and search ranking from scratch. That initial period can eat into your first year’s profit significantly. If I were starting today, I’d budget for at least six months of below-average occupancy before assuming the higher revenue figures apply.
Why the gap between gross income and net profit is wider than you think
The cost difference between the two models is where most people get caught out. A long-term let costs you between £700 and £4,300 per year in total — the tenant pays for utilities, council tax, and internet, and you’re only covering basic landlord insurance and occasional maintenance. An Airbnb property, by contrast, can cost between £14,800 and £34,500 annually. You’re paying for cleaning at £50 to £80 per turnover, utilities that guests use more heavily, council tax that can switch to business rates if you let for more than 140 nights, specialist short-term let insurance that costs £500 to £1,200, and full furnishing that needs replacing every three to five years.
Take a two-bedroom flat in Manchester. The long-term let brings in about £1,100 to £1,400 per month. The Airbnb might generate £1,800 to £2,500 in peak season, but the annual average drops to around £1,300 to £1,900 per month once you factor in low-season bookings. After costs, the margin narrows considerably. In Edinburgh, the festival season creates a unique spike — nightly rates can exceed £300 for a two-bedroom flat in August — but the rest of the year sees rates drop to £1,000 to £1,500 per month. The annual average of £2,000 to £3,000 per month still beats the long-term let of £1,200 to £1,600, but only if you’ve managed your costs tightly.
Where people go wrong with the Airbnb versus long-term let decision
Overestimating occupancy in the first year
New hosts routinely assume they’ll hit 70 per cent occupancy from month one. The data suggests otherwise. In the first three to six months, 40 to 50 per cent occupancy is typical, even in prime locations. That means your gross income in year one could be half of what you projected. If you’ve committed to a mortgage based on peak-season revenue, that gap can be painful. The fix is to run your numbers at 40 per cent occupancy for the first six months and see whether the model still works.
Ignoring the cost of compliance and regulation
Local authorities are increasingly introducing planning permission requirements for short-term lets. London’s 90-day rule already limits Airbnb hosting without planning consent, and Edinburgh has introduced one of the strictest licensing schemes in the UK, which has reduced the number of short-term lets and increased compliance costs. If you’re buying a property specifically for short-term letting, check the local rules before you exchange contracts. A tenant landlord lawyer can help you understand the specific regulations in your area and whether your property qualifies for short-term let licensing.
Underestimating the tax impact of the FHL abolition
The abolition of the Furnished Holiday Let tax regime from April 2025 removed the preferential tax treatment that short-term lets previously enjoyed. You can no longer claim capital allowances on furnishings, offset losses against other income, or benefit from favourable capital gains tax treatment when you sell. This change alone can shift the net profit calculation by thousands of pounds per year. If you were relying on those tax advantages to make the numbers work, it’s worth revisiting your projections.
Treating all cities as equal opportunities
The revenue premium varies dramatically by city. In London, a well-run Airbnb can earn 60 to 80 per cent more than a long-term let. In Bristol, the premium drops to 40 to 55 per cent. In Birmingham, the annual average for an Airbnb is £1,300 to £1,900 per month, compared to £900 to £1,200 for a long-term let — a meaningful but narrower gap. The mistake is assuming that because Airbnb works in one city, it will work in another. Each market has its own occupancy patterns, seasonal swings, and regulatory environment.
→ Scroll right to see all columns
| City | Long-term let (monthly) | Airbnb annual average (monthly) | Revenue premium |
|---|---|---|---|
| London (Zone 1-2) | £2,200 – £2,800 | £3,800 – £5,000 | +60-80% |
| Edinburgh | £1,200 – £1,600 | £2,000 – £3,000 | +55-85% |
| Manchester | £1,100 – £1,400 | £1,300 – £1,900 | +50-70% |
| Birmingham | £900 – £1,200 | £1,300 – £1,900 | +40-55% |
| Bristol | £2,200 – £3,200 | £1,600 – £2,200 | +40-55% |
How to choose the right strategy for your property
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Run the numbers at realistic occupancy
Start with the gross income figures for your city, then apply a realistic occupancy rate. For a first-year host, use 40 to 50 per cent. For an established host in a strong market, use 60 to 70 per cent. Then subtract the full cost stack: cleaning, utilities, council tax, insurance, platform fees, furnishing replacement, and management if you’re using one. Compare that to the long-term let income minus your much lower costs. If the Airbnb net figure isn’t at least 20 per cent higher, the extra work probably isn’t worth it.
Factor in the new tax reality
With the FHL regime gone, the tax treatment of short-term lets is now broadly the same as long-term lets. You can still deduct allowable expenses, but you lose the capital allowances on furniture and the ability to claim loss relief against other income. If you’re a higher-rate taxpayer, this change could reduce your net profit by several thousand pounds annually. Run your numbers with a tax calculator or speak to a financial advisor who understands property income to see how the abolition affects your specific situation.
Consider the management burden
Airbnb is not passive income. At 70 per cent occupancy, you’re managing roughly 100 guest turnovers per year. That means coordinating cleaning, handling check-ins and check-outs, responding to guest messages, managing reviews, and dealing with the occasional problem guest. If you use a management company, expect to pay 20 to 25 per cent of your gross income. A long-term let, by contrast, requires minimal ongoing involvement once the tenant is in place. If your time is valuable, the higher gross income from Airbnb may not compensate for the hours it demands.
Look at the emerging regulatory trend
Local authorities across the UK are tightening rules on short-term lets. Edinburgh’s licensing scheme has already reduced the number of available properties and increased costs for hosts. London’s 90-day rule is well established. More councils are considering planning permission requirements. Before you commit to the short-term let model, check whether your local authority has introduced or is considering new regulations. A property lawyer can review the current rules in your area and flag any upcoming changes that could affect your plans.
Protect your property against higher wear and tear
Short-term lets experience significantly more wear and tear than long-term tenancies. Guests come and go weekly, and the risk of damage, theft, or accidents is higher. A home security starter kit with outdoor cameras and a video doorbell can help you monitor the property remotely and deter issues before they escalate. It’s a relatively small investment that can save you thousands in potential damage claims and insurance disputes.
What occupancy rate do I need for Airbnb to beat a long-term let? ▾
Does the 90-day rule in London apply to all short-term lets? ▾
Can I switch between Airbnb and long-term letting on the same property? ▾
How does the FHL abolition affect my tax bill? ▾
Is Airbnb still profitable in smaller UK cities? ▾
The choice between Airbnb and a long-term let comes down to three things: your property’s location, your willingness to manage the higher workload, and whether the numbers still work after the 2025 tax changes. If you’re in a city with strong year-round tourism demand and you’re prepared to treat the property as an active business, short-term letting can still deliver a meaningful premium. If you want predictable income with minimal effort, the long-term let is the safer bet. Either way, run the numbers at realistic occupancy and include every cost before you decide.
If this was useful, you might also want to read whether short-term letting has damaged the UK housing market.
Sources and Further Reading
Is the UK housing market about to crash? — A look at what experts are saying about property values and where the market is heading next.
Property vs. shares: where should you invest? — A comparison of long-term returns and risk between the two most popular UK investment options.
Airbnb vs long-term let: which is more profitable UK 2026. Uselatch, 2026.
Airbnb vs long-term let: financial comparison. Property Kiln, 2026.
