Is it better to Airbnb or have a permanent tenant?

With every person in the country on the lookout for another passive income stream, is it better to Airbnb your property or have a permanent tenant? 

We’ll take a look in this post at the pros and cons of opening your rental property up to the Airbnb market. With many landlords exploring the possibilities Airbnb has to offer, you must understand how this changes your mortgage and insurance. 

If you need advice about your property insurance, contact us at CIA Landlord’s Insurance today and we’ll be happy to guide you through the right policy for you. 

What are the benefits of having a permanent tenant?

A better screening process for tenants 

At CIA we are always promoting a thorough screening process. With any rental property, you’ll want complete credit checks, good references and a reliable guarantor. With these processes ticked off your screening list, you’re able to build a clearer picture of who will actually be living in your asset. 

In addition, you’ll need to prove your tenant’s right to rent in the UK. There may feel like a few more hoops to jump through when you have a long-term rental agreement. This is certainly true. The benefit of being thorough means you should end up with a reliable and respectable tenant who is a great passive stream of income. 

Having regularity of income 

Long-term rental agreements mean you know when the next batch of income is coming from and on what date. Being able to count on the regularity of rent money allows you to make swift steps toward investing in your second or third rental property making you a landlord who is a ‘multiple home owner’. 

Property management who look over your property can be a huge support when it comes to asking for late rent. This type of support is vital when it comes to keeping that stream of income steady. 

Protection and rights against damage to the property

There’s nothing worse than standing in your property after the tenants have left and it’s a state. If there is clear evidence of malicious damage to your property, there are steps you can take to make sure your tenants are actively correcting the problem or eventually being able to take deductions from their deposit. 

Bear in mind that you will have to follow some essential steps which involve clear communication with your tenants to rectify any damage.

What are the pros and cons of using rental property as Airbnb?

It’s good to have a clear perspective on both the pros and cons of having your rental property as an Airbnb. Here’s our list of both. 

Pros of having an Airbnb property 

Higher income compared to long-term tenant

The potential to make a higher yield on your investment is much greater than having a long-term tenant. Being able to ‘glam up’ your property for the holiday rental market allows you to add a premium to the reservation amount. It’s amazing how much a Nespresso coffee machine will add to the value of an overnight stay. 

How profitable is Airbnb UK?

With a year-on-year increase in annual takings for landlords, we saw 2020 bring in £12,000 and 2021 bring in £22,000 from Airbnb. Hosts make an average of £670 a month in the UK from this stream of income making it an attractive side hustle.

Allows you to have flexibility with that property 

There may come a time when you actually need to use your investment property. With economic uncertainty, having an Airbnb allows you to use the facilities without having to go down the process of ending a tenancy.

Cons for having an Airbnb property

Hosting is hard work 

Not only do you have to make the property desirable, clean and handle the business or bookings, you may also have to go that extra mile to get a good review. 

Being on top of your correspondence is key. In addition, to this, you’ll have to create a seamless system that allows you to change over from one guest to another. Taking into consideration the cleaning fees and management can be a large undertaking in itself.

Not always legal 

Lots of properties are bought with the condition they are not for sublet or for holiday use. Check with your solicitor first before buying a property to see if this is a condition of the purchase. We often see this type of condition in apartments near the coast. 

Unforeseen circumstances are your problem 

If there’s a problem with your property, you better be on call to help the guest out. This endless accessibility to communication can be exhausting for landlords who are running multiple other businesses. 

Ultimately, the choice is yours. To Airbnb or not to Airbnb, that is the question. Depending on your circumstances and situation, a long-term solution may be just the ticket to give you the security and assurance of that rental income. If you’d like to start your tenants off on the right foot, explore our advice page. 

CIA are experts in landlord insurance. We offer specialist holiday home insurance at competitive rates. Get a quote today.