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What Is the Difference Between Airbnb and Long-Term Renting?
Before comparing the two, it helps to be clear about what each model actually involves.
Airbnb (short-term letting) means renting your property to guests for short stays — typically anything from one night to a few weeks. You set the nightly price, manage bookings through platforms like Airbnb or Booking.com, and the property remains furnished and guest-ready at all times. Guests pay per night, and you retain full control over when the property is available.
Long-term renting means leasing your property to a tenant under a formal tenancy agreement. Historically this was an Assured Shorthold Tenancy (AST), though from 1 May 2026 all new tenancies in England are governed by the Renters' Rights Act 2025 as assured periodic tenancies. Tenants typically stay for six months to several years, pay a fixed monthly rent, and take on responsibility for day-to-day living costs such as utilities.
Both involve leasing out your property, but from a business perspective they require entirely different levels of involvement, carry different legal frameworks, and produce very different income profiles.
Income Comparison: How Much Can You Actually Earn?
This is the question most landlords ask first, and the honest answer is: it depends on your property and where it is.
Short-Term Letting Income
Short-term rentals have the potential to generate significantly more revenue than long-term lets. In many UK cities, Airbnb can generate 30–100% more income per month than long-term rents, even after accounting for cleaning, hosting fees, and management costs.
In London specifically, the average Airbnb host earned around £42,000 in the twelve months to January 2026, with an average daily rate of £152 and a median occupancy rate of 74%. However, London is not representative of every UK market. London's 90-night annual cap for entire homes means that without planning permission, hosts are limited to roughly £18,000 in gross revenue per year, which fundamentally changes the profitability calculation compared to other UK cities.
Outside London, the picture is considerably more open. The median nightly price for an entire-home UK Airbnb as of early 2026 sits at approximately £145, with most listings falling somewhere between £95 and £280 per night. In cities like York, Bath, or the Lake District — where tourist demand is strong year-round — short-term letting can be extremely lucrative, with some properties generating twice the monthly income of a long-term lease.
Long-Term Rental Income
Long-term renting produces lower but more predictable income. Average rents vary enormously across the UK. In London, average rents are among the highest in the country, while cities such as Newcastle average around £1,013 per month. The advantage is consistency: once a tenant is in place, you know exactly what you'll receive each month for the duration of the tenancy.
The Income Reality Check
The headline difference in nightly rates can be misleading. A property that achieves £150 per night on Airbnb at 60% occupancy generates around £2,700 per month before expenses. But a long-term tenant paying £1,400 per month generates that income every month with near-zero operational overhead. The real comparison must account for costs, occupancy rates, void periods, and management time — not just nightly rates.
Running Costs: The Full Picture
Airbnb Running Costs
Running a short-term rental is operationally intensive, and the costs add up quickly. Cleaning alone — with professional turnovers between every stay — typically costs between £1,500 and £4,000 per year. Unlike long-term renting, you as the host cover all utilities, which typically adds another £2,000 to £3,500 annually due to constant guest turnover. Maintenance and repairs tend to run £1,000 to £2,000 per year given the higher frequency of use, and you should budget a further £500 to £1,500 for replacing furnishings and consumables. Specialist short-term rental insurance costs £500 to £1,000 per year, notably more than standard landlord cover. On top of all this, Airbnb charges platform fees of between 3% and 15% of each booking's value, and if you use a professional management company you should expect to pay between 15% and 25% of your revenue in management fees.
When you add it all up, total annual running costs for an Airbnb property typically fall between £7,300 and £18,000 before platform and management fees are included, depending on property size and how much of the work you outsource.
Long-Term Rental Running Costs
With a long-term tenant in place, costs are far more contained. Maintenance and repairs typically cost between £500 and £1,500 per year — considerably less than short-term letting because the property experiences less frequent turnover and wear. Landlord insurance runs £300 to £500 annually. Safety certificates — gas safety, electrical inspection, and the EPC — typically cost between £200 and £600 per year combined. If you use a letting agent for full management, their fees of 8–15% of monthly rent are the largest ongoing cost. All in, most long-term landlords spend between £1,700 and £5,000 per year on running costs, making this a significantly leaner operation.
The Net Income Gap Is Smaller Than You Think
The cost gap between the two models is one of the most important factors landlords overlook. A property earning £3,000 per month on Airbnb with £1,500 in monthly costs nets £1,500. A long-term tenant paying £1,600 per month with £150 in monthly costs nets £1,450. The gross figures look worlds apart; the net figures can be very close indeed.
Tax Treatment: What Changed in April 2025
Tax is one area where the two models have historically differed significantly — and where a major government change is now having a real impact.
The Furnished Holiday Let Regime Is Gone
Until April 2025, properties qualifying as Furnished Holiday Lets (FHLs) were treated as trades for tax purposes. This allowed landlords to deduct mortgage interest in full, claim capital allowances on furniture and equipment, and benefit from Business Asset Disposal Relief on sale. This was a meaningful tax advantage over standard buy-to-let.
From 6 April 2025, the government abolished the FHL regime entirely. Short-term rental income is now taxed in exactly the same way as long-term rental income, under normal property income rules. This means the mortgage interest relief restriction — known as Section 24 — now applies equally to both, limiting relief to the basic rate of tax for higher-rate taxpayers. If you previously operated an FHL and benefited from the old regime, your net returns on short-term letting may look noticeably different now, and you should review your position with a qualified accountant.
VAT
If your short-term letting income exceeds the VAT registration threshold (currently £90,000 per year), you may be required to register for VAT and charge it on your bookings. This does not apply to long-term residential lettings, which are exempt from VAT. For landlords running multiple short-term properties, this is a meaningful threshold to keep an eye on.
Council Tax vs Business Rates
Properties used exclusively as short-term holiday lets in England may be subject to business rates rather than council tax if the property is available to let for at least 140 days and actually let for at least 70 days per year. Long-term rental properties remain subject to standard council tax, which is ordinarily paid by the tenant.
Legal and Regulatory Framework
Long-Term Renting: The Renters' Rights Act 2025
The biggest change to the long-term rental market in a generation is now underway, and landlords who have not yet prepared need to act quickly.
From 1 May 2026, Phase One of the Renters' Rights Act 2025 comes into effect. The Act abolishes Assured Shorthold Tenancies and "no-fault" Section 21 evictions entirely. All tenancies are now assured periodic tenancies — open-ended by default — meaning landlords can only end a tenancy by proving one of the specific statutory grounds under Section 8. These grounds include the landlord wishing to sell the property or move in a close family member, but possession proceedings take time and are not guaranteed.
Rent increases are now restricted to once per year, using the formal Section 13 process, which requires landlords to complete Form 4 and give tenants at least two months' notice of any proposed increase. Tenants can challenge any increase at the First-tier Tribunal. Rental bidding — inviting or accepting offers above an advertised price — is also banned from May 2026.
From late 2026, landlords must register themselves and each property on the new Private Rented Sector Database. Registration is mandatory for seeking possession, and civil penalties for non-compliance start at £7,000, rising to £40,000 for serious or repeated breaches.
Curious what your property could earn?
Beyond the Renters' Rights Act, all long-term landlords in England must also comply with a range of existing legal requirements. These include providing a valid Gas Safety Record (CP12) every year, an Electrical Installation Condition Report (EICR) every five years, and an Energy Performance Certificate rated E or above (with the government targeting C by 2030 under proposed future reforms). Tenant deposits must be protected in a government-approved scheme, Right to Rent checks must be completed for all adult occupants, and repairs must be carried out within a reasonable timeframe under the Landlord and Tenant Act 1985.
Short-Term Letting: Regulation Is Tightening Too
Short-term letting is not standing still from a regulatory perspective.
In London, the Deregulation Act 2015 limits short-term letting of an entire home to 90 nights per calendar year without planning permission. Exceed this and you risk enforcement action from your local council. Some London boroughs are becoming more active in pursuing non-compliant hosts.
Nationally, the UK Government has confirmed that a mandatory Short-Term Rental Register is coming, though the exact launch date has been delayed from its originally intended April 2026 target. The direction of travel is clear — it is a matter of when, not if. Once in place, all short-term rental properties will need to be registered, with compliance requirements and associated fees.
In Scotland, Edinburgh has already implemented some of the UK's strictest short-term rental rules, requiring both planning permission and a licence covering fire safety upgrades, insurance, and fit-out standards. This model is being watched closely by other councils across the UK.
It is also essential to check your mortgage terms and any leasehold covenants before listing on Airbnb. Many standard residential mortgages prohibit short-term letting without explicit lender consent, and buy-to-let mortgages often carry similar restrictions. Operating without consent could technically put your mortgage in breach.
On insurance, standard landlord cover does not extend to short-term guests. You will need a specialist short-term rental policy covering public liability, accidental damage, and loss of income, and this will cost more than a standard landlord policy.
Management Effort: The Time Cost Nobody Talks About
Perhaps the most underestimated factor in the Airbnb vs renting debate is how much of your time each model actually demands.
Managing an Airbnb
Running a short-term rental is, in many ways, a hospitality business. Guests expect hotel-level responsiveness and presentation. You need to respond to enquiries quickly — often within minutes to protect your response rating — manage bookings and pricing across platforms, coordinate professional cleans between every stay, restock consumables, handle check-ins and check-outs, resolve any guest issues, and maintain a five-star standard of presentation at all times.
Done properly, this is a significant ongoing commitment. Many landlords quickly discover that self-managing an Airbnb is essentially a part-time job. Outsourcing to a professional Airbnb management company removes the daily burden, but management fees of 15–25% of revenue need to be factored into your returns from the outset.
Managing a Long-Term Rental
Long-term letting is far more hands-off once a good tenant is in place. The effort is largely front-loaded: tenant referencing, Right to Rent checks, inventory preparation, and deposit protection at the start of the tenancy. After that, the main ongoing tasks are periodic property inspections, dealing with maintenance requests, and processing monthly rent. With a full management service through a letting agent typically costing 8–15% of monthly rent, this can become a genuinely passive investment.
Which Model Is Right for Your Property?
Neither model is universally superior — the right choice depends on a clear-eyed assessment of your individual circumstances.
Airbnb tends to work best when your property is in a city centre, tourist hotspot, or area with strong year-round travel demand. If you are outside London — where the 90-day rule does not restrict your annual letting nights — the income ceiling is far higher. It also works best when you have access to professional management, when your mortgage and leasehold documents permit it, and when you are comfortable with some degree of income variability.
Long-term renting tends to work best when you want predictable, passive monthly income without significant operational involvement. It suits properties in areas with strong residential demand, landlords with mortgages that require consistent income, and those who simply do not want the complexity of running a hospitality operation. It is also the natural default choice for London properties where the 90-day rule caps short-term income.
A hybrid approach is worth considering too. Some landlords use Airbnb during peak tourist seasons and switch to medium or long-term lets during quieter months. Done well, this can smooth out revenue gaps while still capturing the premium that short-term guests are willing to pay during high-demand periods.
Let HostMyNest Take Care of Everything
If the analysis above has you leaning towards short-term letting but the management demands feel overwhelming, that is exactly the problem HostMyNest was built to solve.
We are a specialist UK Airbnb management company working with property owners who want to unlock the higher income potential of short-term letting — without giving up their time, energy, or peace of mind to do it. Our team handles everything end-to-end, from initial listing setup and professional photography through to dynamic pricing, guest communication, cleaning coordination, maintenance management, and monthly reporting.
Our clients earn more than they would from a long-term tenant. They also spend none of the time that would otherwise go into running a short-term rental themselves. We take a commission only on bookings we generate, which means our success is tied directly to yours.
Whether you currently have a long-term tenant and are curious about what switching could earn you, or you are a new property owner trying to make the right decision from the start, we offer a free, no-obligation property assessment and income estimate. We will give you an honest picture of what your property could realistically earn on Airbnb, and whether short-term letting is the right fit.
Get in touch with the HostMyNest team today and find out what your property could be doing for you.
Frequently Asked Questions
Is Airbnb more profitable than renting in the UK? It can be, but it depends heavily on location, occupancy rates, and running costs. In high-demand tourist areas outside London, well-managed short-term properties can earn significantly more than a long-term tenant. In residential areas with lower tourist demand, or in London where the 90-day rule applies, long-term renting may produce comparable or better net returns once all costs are accounted for.
Can I switch from long-term renting to Airbnb? Yes, but you will need to check your mortgage terms, any leasehold restrictions, and local planning rules first. Under the Renters' Rights Act 2025, you will also need to follow the correct legal process to end an existing tenancy before relisting the property on a short-term basis.
Do I need planning permission to run an Airbnb in the UK? Outside London, in most cases no — though this is changing as more councils seek greater powers over short-term lets. In London, you can let your entire home for up to 90 nights per year without planning permission under the Deregulation Act 2015. Beyond that limit, you will need a change-of-use application from your local planning authority.
What has changed for landlords under the Renters' Rights Act 2025? From 1 May 2026, Section 21 no-fault evictions are abolished, fixed-term tenancies are replaced by open-ended periodic tenancies, rent increases are limited to once per year via the Section 13 process, and rental bidding is banned. A mandatory Landlord Database is being introduced from late 2026, with significant penalties for non-compliance. These changes make long-term tenancy management more complex and somewhat riskier for landlords who may need to regain possession of their property.
Can I use Airbnb if I have a buy-to-let mortgage? Usually not without your lender's explicit consent. Most buy-to-let mortgages prohibit short-term letting. Some specialist lenders offer mortgage products designed for short-term rental use, but these are less common. Always speak to your mortgage broker before listing a mortgaged property on Airbnb. Read our article about Airbnb and mortgages
What tax do I pay on Airbnb income in the UK? Short-term rental income is now taxed as standard property income following the abolition of the Furnished Holiday Let tax regime in April 2025. The mortgage interest relief restriction applies equally to short-term and long-term landlords. You are entitled to a £1,000 property income allowance and can deduct genuine allowable expenses. Speak to a specialist property accountant to ensure your position is correctly structured.
What is the 90-day rule for Airbnb in London? Under the Deregulation Act 2015, you can rent out your entire home in London on a short-term basis for a maximum of 90 nights per calendar year without planning permission. After 90 nights, planning consent is required. The rule applies to entire-home listings; renting out a spare room while you live in the property is treated differently.
Do I need specialist insurance for an Airbnb? Yes. Standard landlord insurance does not cover short-term guests. You will need a specialist short-term rental insurance policy that covers public liability, accidental damage by guests, and ideally loss of income. Airbnb provides AirCover for Hosts, but most professional operators recommend supplementing this with a standalone policy for complete protection.
This article was last updated in April 2026. Tax rules, regulations, and market data are subject to change. Always seek independent legal and financial advice before making property investment decisions.