Is the Airbnb Boom Over? What Landlords Need to Know in 2025
Over the past decade, the rise of Airbnb and short-term letting platforms changed the game for landlords. Suddenly, a small flat in a tourist hotspot could yield more in a week than a long-term tenancy paid in a month.
But in 2025, the short-let sector is facing a serious reality check — and landlords are asking: is the Airbnb boom over?
The short answer is: it depends.
🔍 Mixed Performance: The Short-Let Sector Is Splitting
Contrary to the headlines, short-term lets aren’t crashing across the board — but there’s growing divergence.
📉 Urban Apartments Are Under Pressure
- AirDNA data shows occupancy rates in central London have dropped to 52%, down from ~65% in 2022.
- Nightly rates have softened in oversaturated city markets, particularly in blocks of flats.
- Landlords report fierce competition, rising vacancy periods, and increasing guest expectations.
City-by-City Performance (Source: AirDNA Q2 2025):
|
City
|
Occupancy Rate
|
Avg. Nightly Rate
|
YoY Revenue Change
|
|---|---|---|---|
|
London
|
52%
|
£139
|
-9.8%
|
|
Edinburgh
|
58%
|
£162
|
-6.4%
|
|
Manchester
|
61%
|
£124
|
-4.7%
|
|
Bristol
|
55%
|
£132
|
-7.3%
|
|
Glasgow
|
59%
|
£116
|
-5.1%
|
🔗 See our previous blog: Short-Term vs Long-Term Letting – Which Strategy Wins in 2025?
🌲 Rural & Seasonal Properties Still Performing
- Well-located holiday cottages and rural retreats (e.g., coastal Wales, Cotswolds) are still doing very well during peak season.
- Your brother’s and sister’s Airbnb in countryside locations may be yielding strong summer returns — and this reflects a broader trend.
- But they likely see winter dips and off-season voids, a major drawback for income planning.
Short-lets aren’t broken — they’re just no longer a set-and-forget cash machine. The market has matured.
⚖️ Regulations Are Tightening Fast
2025 is the year regulators really started biting:
- National registration scheme rolling out in England — all short-lets must be registered with local councils
- Planning permission now required for short-term lets in many areas (including much of London, Edinburgh, and Bath)
- 90-night annual cap in London remains in place — breach it, and you may need to convert to commercial use
- New licensing schemes in tourist-heavy councils (e.g., Brighton, York) creating added compliance costs
- Draconian council tax surcharges on second homes are now being introduced in some areas — up to 100% premiums in places like Cornwall and the Lake District, making holiday lets even more expensive to hold long-term
🔗 For more on regulation shifts, see: Rent Reform Update – What Landlords Need to Know
These changes are making it harder for new entrants and even some existing hosts to stay compliant.
💸 The Hidden Costs Are Stacking Up
Short-term lets often sound lucrative — but the true net yield tells a different story:
|
Expense Category
|
Approx. % of Gross Income
|
Notes
|
|---|---|---|
|
Airbnb/Platform Fees
|
12–20%
|
Booking.com and others similar
|
|
Cleaning & Laundry
|
10–15%
|
High turnover increases this
|
|
Management Fees (if outsourced)
|
15–25%
|
For full-service operators
|
|
Furnishing & Refurbs
|
Upfront
|
Ongoing wear-and-tear cost
|
|
Void Periods
|
59%Variable
|
Seasonal dips can hit cashflow
|
|
Insurance, Council Tax, Utilities
|
Fixed
|
Often higher than BTL
|
⚠️ Many landlords underestimate these. An 8% gross yield can easily become 3–4% net.
If you self-manage, you can preserve more profit — but it becomes a time-consuming job.
🛏️ What About Mid-Term Lets?
Mid-term lets (typically 1–6 months) are growing in popularity — especially among relocating professionals, NHS staff, and insurance tenants.
They’re often pitched as a compromise between short-term volatility and long-term regulation — but they aren’t a silver bullet.
🧺 What’s Included?
|
Feature
|
Typical Inclusion
|
Notes
|
|---|---|---|
|
Furniture
|
✅ Fully furnished
|
Standard expectation
|
|
Kitchenware
|
✅ Included
|
Full set required
|
|
Towels & Bedding
|
✅ Often
|
Needs laundering and changing
|
|
Cleaning
|
🟡 Optional
|
Offered weekly/monthly
|
|
Utilities & Wi-Fi
|
✅ Usually bundled
|
Simplifies experience
|
⚖️ Are They Exempt From Renters’ Reform?
- No — if the let becomes someone’s main residence, the reforms apply, including rolling tenancy rules and eviction limitations.
- The only exemptions are: holiday lets, student halls, or licenced serviced accommodation.
To strengthen your case:
- Provide regular linen changes and light cleaning
- Use a licence agreement or work with corporate housing platforms (e.g. AltoVita, Nestify)
Without clear services, councils or tribunals may deem it an AST — putting you under the full weight of tenant protections.
🔄 So, What Are the Alternatives?
With short-lets becoming more volatile, many landlords are rebalancing their strategy:
1. Long-Term AST Lettings
- Simpler regulation, lower overhead
- Steady rental income
- Better suited to city flats and HMOs
2. Mid-Term Corporate Letting
- For professionals and insurance contracts
- Avoids short-let volatility
- Must still be structured carefully
3. PBSA or Commercial Assets
- Commercial student housing offers high returns and exemption from short-let rules
- See: PBSA vs BTL – Which Delivers Better Returns?
🧭 What Should You Do Now?
- Audit your short-let portfolio: Check occupancy trends, fees, and true net yield
- Check your council’s local rules: Regulation is now postcode-specific
- Stress-test your income: What happens if bookings fall 20%?
- Consider diversifying: Even if you keep short-lets, hedge with a stable AST
- Speak to a tax adviser: The VAT treatment and income tax handling of short-lets is different from BTLs
📩 Want help reviewing your portfolio? Contact Residence Index UK for a free consultation.
🔚 Final Thoughts
No — the Airbnb model isn’t dead. But it’s maturing fast, and not everyone will thrive.
If you have:
- A unique, well-located property
- Time (or a great manager)
- A handle on compliance and reviews
…then short-lets can still outperform.
But for many landlords, 2025 is a good time to review your exposure — and ask whether a long-term tenant might now be the smarter move.
Coming Soon: “5 Yield-Boosting Alternatives to Short-Term Lets” — Subscribe to our blog for more.
