If you own an investment property in London, one of the biggest decisions you’ll make is how to let it. Should you maximise your income through short-term rentals, or opt for the stability of a long-term tenant?

There isn’t a universal answer. The right strategy depends on your property’s location, your financial goals, your appetite for risk and how much flexibility you want as an owner.

Traditionally, many landlords preferred long-term letting because it provided predictable monthly rental income with relatively little day-to-day involvement. However, London’s thriving tourism market, increasing demand for corporate accommodation and the rise of professional Airbnb management companies have made short-term letting an increasingly attractive alternative.

At the same time, the introduction of the Renters’ Rights Act has significantly changed England’s private rental sector. New residential tenancies are now periodic assured tenancies rather than fixed-term Assured Shorthold Tenancies (ASTs), prompting many landlords to reassess whether a traditional tenancy still offers the right balance of income, flexibility and control.

In this guide, we’ll compare Airbnb management and long-term letting across profitability, costs, flexibility, legal considerations and investment potential to help you determine which approach is best suited to your London property.

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Airbnb vs Long-Term Letting at a Glance

Which Strategy Generates Higher Rental Income?

For many landlords, the primary consideration is simple: which strategy will generate the greatest return?

In many parts of Central London, professionally managed Airbnb properties can outperform traditional rentals by a significant margin. Instead of charging a fixed monthly rent, Airbnb hosts earn income on a nightly basis, allowing revenue to increase during periods of strong demand such as summer holidays, major sporting events, business conferences and Christmas.

For example, a two-bedroom apartment in Westminster, Kensington or Covent Garden might achieve an average nightly rate of £230–£260 while maintaining annual occupancy of around 70–80% under professional management. This can result in substantially higher gross revenue than the same property let on a long-term basis.

However, higher revenue also comes with higher operating costs. Owners are responsible for utilities, cleaning, guest communication, maintenance, replenishing supplies and marketing. This is why many landlords choose a professional Airbnb management company to handle the day-to-day operation while optimising occupancy and pricing throughout the year.

Long-term letting follows a different model. Rental income is typically fixed on a monthly basis, making budgeting easier and reducing exposure to seasonal fluctuations. Although the annual income is often lower in prime locations, many landlords value the consistency and reduced operational complexity.

The key question is therefore not simply “Which earns more?”, but “Which delivers the strongest overall return for your property and investment objectives?”

Example: Airbnb vs Long-Term Rental Income

The example below illustrates how the two approaches can compare for a modern two-bedroom apartment in Westminster. Actual performance will vary depending on location, property quality, occupancy levels and market conditions, but it demonstrates why many central London landlords consider short-term letting.

Why Location Matters More Than Ever

Not every London property is suited to short-term letting. The highest-performing Airbnb properties tend to be located in areas with consistent demand from tourists, business travellers and relocating professionals.

Neighbourhoods such as Westminster, Notting Hill, South Kensington, Covent Garden, Fitzrovia, Soho, Paddington and Canary Wharf typically command higher nightly rates because they attract a diverse mix of leisure and corporate guests throughout the year.

By contrast, properties in predominantly residential suburbs often achieve stronger returns through traditional long-term letting, where demand is driven by local families and professionals seeking permanent accommodation.

For this reason, evaluating your property’s location should be the first step before deciding which strategy is likely to maximise your investment returns.

The True Cost of Each Letting Strategy

Gross rental income only tells part of the story. To understand which strategy is more profitable, landlords need to consider the ongoing costs of operating the property.

With a traditional long-term tenancy, many day-to-day expenses are transferred to the tenant. They are typically responsible for utility bills, council tax and internet services, while the landlord covers maintenance, insurance and any agreed management fees.

Airbnb properties operate differently. The owner is usually responsible for almost every operational cost, including utilities, professional cleaning, linen, toiletries, broadband and guest support. At first glance these additional expenses can make short-term letting appear less attractive.

However, professionally managed Airbnb properties are also actively optimised to maximise revenue. Dynamic pricing software adjusts nightly rates according to demand, occupancy trends and local events, helping owners increase income throughout the year. A property that sits empty for several weeks because it is priced incorrectly can lose thousands of pounds annually, which is why experienced management often makes a measurable difference.

Rather than focusing solely on operating costs, landlords should compare net returns after all expenses have been deducted.

Typical Running Costs

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How the Renters’ Rights Act Changes the Decision

One of the biggest changes affecting landlords in 2026 is the implementation of the Renters’ Rights Act.

The legislation introduced significant reforms to England’s private rented sector, including replacing new Assured Shorthold Tenancies (ASTs) with periodic assured tenancies. While the reforms are intended to strengthen tenants’ rights, they have also prompted many landlords to reassess how they let their properties.

For investors who value certainty and predictable income, long-term letting remains an attractive option. However, landlords who place a high value on flexibility may now look more closely at short-term letting.

Unlike a residential tenancy, professionally managed Airbnb accommodation allows owners to:

• Block dates for personal use.
• Carry out renovations without waiting for a tenancy to end.
• Prepare a property for sale more easily.
• Adjust pricing in response to market demand.
• Switch strategies if market conditions change.

That additional flexibility has become a more significant consideration for many London property owners, particularly those with second homes or investment properties in central London.

It is important to note that landlords should always ensure they comply with all applicable legislation, mortgage conditions, lease restrictions and local planning requirements before deciding which letting strategy to adopt.

Flexibility: A Major Advantage of Airbnb Management

For many investors, flexibility is almost as valuable as rental income.

A property managed as an Airbnb can be made available whenever the owner wishes. Whether you want to stay in the property for a few weeks, carry out refurbishment works or simply keep certain dates unavailable, this can usually be achieved by blocking bookings in advance.

A long-term tenancy offers much less flexibility because the property remains the tenant’s home until the tenancy ends in accordance with the applicable legal framework.

This makes Airbnb particularly attractive for:

• Overseas investors who occasionally visit London.
• Owners of second homes.
• Corporate landlords.
• Investors considering selling within the next few years.
• Landlords who may wish to move back into the property in the future.

Which Strategy Gives You More Control?

Risk Comparison

No investment strategy is without risk, and landlords should understand the different challenges associated with each approach.

Airbnb income depends on occupancy. Demand may fluctuate during quieter periods, and nightly rates can vary throughout the year. Properties also experience more frequent guest turnover, which generally leads to greater wear and tear.

Long-term letting offers more predictable monthly income, but landlords face different risks. Rent reviews are less frequent, unexpected maintenance issues can arise during a tenancy, and recovering possession of a property is now governed by the updated legal framework introduced under the Renters’ Rights Act. For some landlords, this may reduce flexibility compared with previous arrangements.

The good news is that many Airbnb-related risks can be mitigated through professional management. Dynamic pricing, high-quality photography, responsive guest communication, preventative maintenance and revenue optimisation all help improve occupancy and maximise returns.

Similarly, careful tenant referencing, regular property inspections and proactive management remain essential for long-term landlords.

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Which Properties Are Best Suited to Each Strategy?

Not every property performs equally well as an Airbnb, just as not every property is ideally suited to long-term letting.

Location, property type, local demand and ownership objectives all influence which strategy is likely to produce the strongest returns.

In general, Airbnb performs best where there is consistent demand from tourists, business travellers and relocating professionals. Long-term letting is often the better choice in predominantly residential areas where demand comes from families and people seeking permanent accommodation.

Property Suitability Comparison

When Airbnb Management Is the Better Choice

Professional Airbnb management is often the preferred option for landlords who want to maximise income while retaining flexibility.

It can be particularly suitable if:

• Your property is located in Central London or another high-demand area.
• You own a second home that is vacant for part of the year.
• You want the flexibility to use the property yourself.
• You are planning to sell within the next few years.
• You are comfortable with income varying throughout the year.
• You want to benefit from professional pricing, guest communication and revenue management without handling the day-to-day workload yourself.

For many investors, outsourcing operations to an experienced Airbnb management company allows them to enjoy the financial benefits of short-term letting without the time commitment.

When Long-Term Letting May Be the Better Option

Traditional letting remains an excellent choice for many landlords and should not be overlooked.

It may be the better strategy if:

• Your property is located in an area with limited short-term rental demand.
• You prioritise consistent monthly cash flow.
• Your mortgage or lease restricts short-term letting.
• You prefer fewer guest turnovers and lower operational involvement.
• You are investing for long-term rental income rather than maximum yield.

For many suburban properties, long-term tenants continue to provide a dependable and relatively low-maintenance investment.

Can You Switch Between the Two?

One of the advantages of professional Airbnb management is that it offers greater operational flexibility.

Some landlords begin with a long-term tenancy before switching to short-term accommodation as local demand changes. Others move in the opposite direction after deciding they prefer stable monthly income.

The right strategy can also evolve over time. A property that performs exceptionally well as an Airbnb today may become better suited to long-term letting in the future, depending on market conditions, regulations and your personal circumstances.

Before changing strategy, landlords should always review any mortgage conditions, lease restrictions, planning requirements and applicable regulations.

Final Thoughts

There is no universal answer to the question of whether Airbnb management or long-term letting is better.

For well-located properties in Central London, professionally managed Airbnb accommodation can often generate higher annual returns while giving owners significantly greater flexibility. Revenue management, dynamic pricing and access to a global audience of travellers can make a meaningful difference to overall profitability.

Long-term letting, however, continues to offer stable income and remains an excellent choice for many landlords, particularly where short-term rental demand is lower or where predictable monthly cash flow is the priority.

The most successful landlords don’t simply ask which strategy earns more—they ask which strategy best matches their property’s location, their financial objectives and the level of involvement they want in managing their investment.

If you’re unsure which approach is likely to deliver the strongest return, obtaining a tailored income projection based on your property’s location and characteristics is often the best place to start.

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