Over 300,000 landlords have left the private rental sector since 2016, according to industry data. That number tells you something important: the traditional buy-to-let model is under serious pressure. I’ve been watching this shift for years, and the pattern is clear — rising mortgage rates, tighter tax rules, and the looming Renters’ Rights Bill are pushing property investors to rethink everything. Many are now looking at short-term lets as a way to keep their portfolios profitable.
That gap between a 2–3% net return and an 8–15% one is why the conversation has shifted. It’s not just about chasing higher income — it’s about survival in a market where the old rules no longer work. The government is also stepping in with new planning rules for short-term lets, so the landscape is changing fast. Here’s what you actually need to know.
If you’re weighing up whether to stay in long-term lettings or make the switch, you might also find our piece on whether short-term letting is damaging UK communities useful context — it covers the other side of the debate.
What short-term letting actually means for your property
The most important thing to understand is that short-term letting is treated differently by both tax law and planning law. It’s not just a faster way to rent out a flat — it’s a different business model entirely. The income is classified as trading income, not rental income. That distinction unlocks tax advantages that buy-to-let landlords have lost over the past decade.
What I’d do if I were looking at this route: get clear on the 90-day rule first. In Greater London, you can let a property for up to 90 nights a year without needing planning permission. Outside London, the rules are changing — the government is creating a new planning use class for short-term lets that aren’t a primary home. Existing short-term lets will automatically switch into the new class, but new ones will need permission. That’s a real shift, and it means the window for switching without bureaucracy is narrowing.
Why the traditional buy-to-let model is losing its appeal
The numbers tell a stark story. A typical buy-to-let property in the UK now yields around 3.5–5% gross, and after tax changes, that often drops to 2–3% net. Meanwhile, a comparable property let as short-term accommodation can generate 8–15% net. Take a two-bedroom flat in Clapham, Zone 2 London. On a traditional assured shorthold tenancy, it might bring in £1,800 a month. As a short let, with professional management, that same flat can generate around £3,100 a month — a 54% income uplift after costs.
That difference isn’t just about higher nightly rates. It’s also about tax. Section 24 of the Finance Act 2015 capped mortgage interest relief at the basic rate of 20% for buy-to-let landlords, hitting higher-rate taxpayers especially hard. Short-let landlords don’t face that restriction — mortgage interest is fully deductible as a business expense. And because the income is trading income, you can also claim capital allowances on furniture, appliances, and fittings through the Annual Investment Allowance.
There’s a demographic angle too. In tourist-heavy areas like Cornwall, the Lake District, and parts of Scotland, local councils have complained that too many holiday lets are driving up property prices and pushing out residents. The government’s new rules are a direct response to that pressure. If you’re operating in one of those areas, the planning changes will affect you sooner rather than later. I’ve seen this pattern repeat across different regions — the areas with the highest short-let returns are often the ones where councils are most eager to regulate.
For more on how location affects property decisions, our article on coastal living versus city life explores the trade-offs between different markets.
Where landlords get the switch wrong
The most common mistake I see is assuming you can use your existing buy-to-let mortgage. Most standard BTL mortgages don’t permit short-term letting. If you let a property on a short-term basis without the right mortgage, you’re in breach of your terms — and that can mean the lender demanding full repayment. You need a mortgage that specifically allows holiday letting or serviced accommodation. Several specialist lenders now offer these products, but you have to ask for them.
The second mistake is underestimating the management burden. Short-term lets require constant attention — guest communication, check-ins, cleaning, pricing adjustments, and handling complaints. The Clapham example I mentioned earlier assumes an 18% management fee, which is typical for a professional service. If you try to do it yourself, you’ll save that fee but lose a lot of time. A home security starter kit can help you manage access and monitor the property remotely, which reduces some of the hands-on work.
The third mistake is ignoring the 90-day rule. In London, you can let for up to 90 nights a year without planning permission. But if you go over that, you need permission — and councils are increasingly likely to refuse it. Some landlords try to work around this by switching to mid-term lets (30+ nights) for the rest of the year, which don’t count toward the 90-day limit. That’s a legitimate strategy, but you need to plan for it from the start.
The fourth mistake is failing to register. The government is introducing a national database for short-term lets. All properties must be registered, and the data will help councils assess the number of short-term lets in their area and enforce health and safety compliance. If you don’t register, you risk fines or enforcement action.
→ Scroll right to see all columns
| Metric | Traditional BTL | Short Let |
|---|---|---|
| Monthly rent/revenue | £1,800 | £3,100 |
| Annual gross | £21,600 | £37,200 |
| Management fee | £2,160 (10%) | £6,696 (18%) |
| Running costs | £2,400 | £4,200 |
| Net annual income | £17,040 | £26,304 |
If you’re unsure about the legal side of switching, speaking to a tenant landlord lawyer can help you understand your obligations before you make a move.
How to switch from buy-to-let to short-term lets
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If you’ve decided to make the switch, here’s the process I’d follow. It’s not complicated, but it needs to be done in the right order.
Check your mortgage and get the right product
This is the first step and the one most people get wrong. Contact your lender and tell them you want to switch to a holiday-let or serviced accommodation mortgage. If they don’t offer one, you’ll need to remortgage with a specialist lender. Don’t start letting until the new mortgage is in place. The consequences of breaching your terms are serious — lenders can demand the full loan back immediately.
Understand the planning rules in your area
In Greater London, you can let for up to 90 nights a year without planning permission. Outside London, the new rules create a separate planning use class for short-term lets that aren’t a primary home. Existing short-term lets will automatically change class, but new ones need permission. Check with your local council before you start. Some councils have already removed permitted development rights in their area, which means you’ll need full planning permission even for short lets.
Set up your tax structure
Because short-let income is trading income, you’ll need to register as self-employed with HMRC if you haven’t already. Keep records of all income and expenses separately from your other property income. You can claim capital allowances on furniture, appliances, and fittings through the Annual Investment Allowance. Mortgage interest is fully deductible. If you’re unsure about the tax treatment, a financial advisor can help you structure things correctly from the start.
Prepare the property and choose a management approach
Short-term lets need to be furnished and equipped to a higher standard than long-term rentals. You’ll need good-quality furniture, kitchen equipment, linens, and toiletries. You also need to think about security — guests will be coming and going, and you won’t be there to supervise. A full home security kit with cameras and a video doorbell can give you remote visibility and peace of mind. Decide whether you’ll manage the property yourself or use a professional management company. The Clapham example assumes an 18% management fee, which is typical. If you self-manage, you’ll save that fee but need to handle bookings, cleaning, guest communication, and maintenance yourself.
Register on the national database
Once the government’s national database for short-term lets goes live, you’ll need to register your property. This is mandatory. The data will be used by councils to assess the number of short-term lets in their area and enforce health and safety compliance. Don’t skip this step — it’s not optional.
- 1Check your mortgageContact your lender and arrange a holiday-let or serviced accommodation mortgage before you start letting.
- 2Check planning rulesConfirm whether your local council requires planning permission for short-term lets. In London, the 90-day rule applies.
- 3Set up your tax structureRegister as self-employed, keep separate records, and claim capital allowances and full mortgage interest relief.
- 4Prepare the propertyFurnish to a high standard, install security measures, and decide on self-management versus a professional service.
- 5Register on the national databaseOnce live, register your property to comply with the new rules and avoid fines.
If you’re thinking about how property fits into your broader retirement plans, our guide on downsizing and retirement property covers the long-term picture.
Frequently asked questions
Can I use my existing buy-to-let mortgage for short-term letting? ▾
What happens if I exceed the 90-day limit in London? ▾
Is short-term letting more profitable than buy-to-let? ▾
Do I need planning permission for a short-term let outside London? ▾
What tax advantages do short-term lets have over buy-to-let? ▾
Do I need to register my short-term let property? ▾
The shift from buy-to-let to short-term lets isn’t a fad — it’s a response to a decade of regulatory and tax changes that have made traditional lettings much harder to profit from. The numbers are clear: higher yields, better tax treatment, and more control over your property. But the window is closing. The new planning rules are coming, and the national database will make it harder to operate outside the system. If you’re thinking about making the switch, the time to act is now — before the rules tighten further.
If this was useful, you might also want to read decoding the UK’s property affordability crisis.
Sources and Further Reading
Is the UK property market in a bubble or just adjusting? — A deeper look at whether current property prices are sustainable or due for a correction.
New rules for short-term lets in England. Landlords’ Guild, 2025.
Buy-to-let is dead? Why UK landlords are switching to short lets in 2026. BnBme, 2025.
UK Renters’ Rights Bill: Why short-term rentals are a smart move for landlords. The Casalyst, 2025.
