Deciding between investing in HMOs, Airbnb or holiday lets is a big decision and needs some thought. In this blog, we look at the pros and cons of HMOs (houses in multiple occupation or student lets), Airbnb, and holiday lets; with holiday let management in Falmouth being a prominent choice.
Focusing on the diverse array of buy-to-let options, we zoom in on HMOs, Airbnb hosting, and holiday lets. Unlike the traditional long-term occupancy model, these alternatives target specific audiences, varying rental durations, and navigating through unique regulatory requirements.
What’s a HMO?
HMOs are rental properties where three or more unrelated individuals live together, each contributing separate rents. The shared facilities create a room-by-room renting scenario, placing responsibilities such as furnishing, maintenance, and utilities squarely on the landlord.
HMO pros
High rental yield: Individual room rentals generate higher rental income than a normal Buy to let.
Steady demand: Targeting students and young professionals ensures a consistent tenant pool.
Reduced vacancy risk: Multiple tenants mitigate income interruptions, for example, if one tenant moves out, then the other tenants are still paying so you’re likely to have a steady income stream.
HMO cons
Increased management responsibilities: Managing the needs of multiple tenants in an HMO can be complex and time-consuming, involving coordination of various aspects such as repairs, complaints, and tenant relations.
Stricter regulations: HMOs are subject to different and often more stringent regulations than standard rental properties. Large HMOs may require a license from the local council, adding a layer of administrative complexity.
More wear and tear: With multiple tenants living in the same property and a potentially more transient nature of occupancy, the property is likely to experience greater wear and tear, leading to increased maintenance costs.
Problems with tenants: Dealing with issues such as non-payment or disruptive behaviour from tenants can be a challenge and may require more active management.
Increasing costs: HMOs may face ever-increasing energy costs, new regulatory requirements and uncertainties, leading to additional expenses for the landlord. This can impact the overall profitability of the investment.
Landlords and the Airbnb scene
Airbnb, an online platform, facilitates connections between property owners and short-term renters. Hosts enjoy flexibility in renting out entire properties or individual rooms, with complete control over pricing and availability. Using a holiday let management company is a good idea if you are time poor or you wish for a hands-off approach. Management companies like Guested can optimise your listing, further increasing your occupancy and revenue.
Airbnb pros
Flexibility: You have control over when to rent out your property and for how long, providing flexibility for personal use or other arrangements.
High rental yield: Depending on the location and specifications of your property, there is potential to earn more on a daily basis compared to traditional long-term rentals.
Clean house: Cleaning services and hosts ensure that your home is well-maintained and cleaned after every booking, contributing to a positive guest experience.
Personal use: Owners can enjoy staying in their own home in a holiday destination, combining personal enjoyment with rental income.
Airbnb cons
More management responsibilities: Bookings, communication, and property upkeep can be time-consuming.
Risk of negative reviews: Impactful on future bookings and property reputation.
Regulatory challenges: Compliance and licensing requirements vary by location.
Unravelling the Holiday Let Concept
Holiday lets, let for short durations, typically a week or less, are often situated in tourist hotspots and coastal towns like Falmouth, Cornwall. Distinguishing them from Airbnb, holiday lets may offer additional services like cleaning and catering.
Although numerous properties on Airbnb are classified as holiday lets, it's essential to recognise that not all holiday lets are affiliated with Airbnb. Understanding this distinction is critical, particularly due to specific tax benefits that may be claimed if your holiday let aligns with certain requirements. A key criterion is that a holiday let must be exclusively designated for holidays. In contrast, an Airbnb listing has the flexibility to cater to both leisure and business travellers, emphasising the importance of clarity in property usage for regulatory and tax considerations.
Holiday let pros
High rental yield: Comparable to Airbnb, though potentially seasonal.
Opportunity for personal use: Use the property during quieter months.
Holiday let cons
Potential for inconsistent income: Seasonal fluctuations may affect demand.
Potential for higher furnishing costs: Ensuring a fully furnished, an appealing space can incur expenses.
More regulations involved: Compliance with safety and waste management regulations is crucial.
Maximising your rental property
Regardless of the chosen avenue—HMO, Airbnb, or a holiday let—setting your property apart is key. Consider the location, prioritise appealing decor, and strategise marketing efforts to enhance the property's overall appeal.
Embarking on your property investment
Choosing between HMOs, Airbnb, or holiday lets hinges on factors like location, personal preferences, and individual circumstances. Each option brings its own set of advantages and disadvantages, demanding careful evaluation. Seek professional advice, particularly for holiday or HMO lets, given their specific regulatory landscapes.
Get in touch with us today to explore your options and receive expert guidance on holiday let management in Falmouth.