Unraveling the Pros and Cons of Short-Term and Long-Term Real Estate Investments
Unraveling the Pros and Cons 
of ShortTerm and LongTerm 
Real Estate Investments

Unraveling the Pros and Cons of Short-Term and Long-Term Real Estate Investments

There has long been debate around which is more optimal for property investors, short-term or long-term leases. Unica Capital, a leader in the real estate investment market, compares the advantages and challenges across both commercial and residential property sectors, looking at not just profitability, but overall which strategy works best.

The lease term’s duration is an important factor when negotiating terms, a decision that holds significant weight for both landlords and tenants.

How do short-term lettings benefit Landlords?
At a glance, short-term rentals entice landlords with the promise of higher rates, yet expert assessments cannot overlook the intricate demands inherent in such arrangements.

Insights drawn from the English Housing Survey shed light on an interesting trend: seasoned private residential landlords tend to lean towards short-term tenancies. Landlords with three or more years of experience displayed a greater inclination towards offering shorter tenures, driven by the advantages of easier removal of problematic tenants.

  • Residentially, short-term lettings such as holiday rentals or 6 month contracts for prime locations can mean that the tenants can pay a higher rate and landlords can strategically use tenancy breaks to align rents with inflationary trends. This can work equally well for tenants as it allows them the flexibility to stay in a specific location for a matter of weeks or months, adapting to their work or lifestyle requirements before considering a move to another property.
  • Commercially, in this current environment where the prime real estate market shows no sign of slowing, even with tenant turnover, landlords can enjoy continuously occupied premises and increase the rental amount to the market rate for subsequent tenancies.
  • Flexibility for the landlord and tenant, this particularly advantageous for properties situated in commercial prime real estate areas. This is especially important to some tenants renting office space in central London, as having flexibility within a short lease provides the ability to move to a different location in order to attract and hire new staff, which can be vital to growing businesses.

How do Long-Term Lettings benefit Landlords?
The inclination for extended tenancies reflects an appreciation for stability, something valued by Unica Capital. While short-term rentals may hold immediate appeal, the broader view of long-term arrangements can streamline management complexities and nurture lasting tenant connections. This perspective resonates with a Property Loop article. It highlights the significance of factors like location, demand, and the balance between costs and stability in profitability. While short lets have their benefits, the durability of long-term rentals underscores a dedication to stable income and sustainable and predictable portfolio growth.

  • In the prime real estate commercial market, landlords can calculate the anticipated return on investment (ROI) over the term of the lease. For landlords who may be considering divesting their portfolios, knowing this ROI means that the property may sell for a higher price because of the projected yield and guaranteed annuity stream. This impact is greater if you’re leasing in a location where there is more demand than supply, such as central London (Soho, Mayfiar, Westminster, etc).
  • These long-term commercial real estate leases are particularly attractive to tenants wanting to offer stability to their business, and the opportunity to secure an office in a prime location for a longer period of time. This benefits the landlord as it fosters trust between themselves and their tenants. The tenants’ employees are able to structure their lives and daily commutes around a consistent office environment, eliminating the uncertainty of relocation.
  • For residential properties, the long-term rental landscape offers the opportunity to foster relationships with respectful tenants as well as the stability and predictability of an assured income.


Ultimately, the choice between short and long-term rentals is dependent on the investors’ long term goals. In the real estate property investment landscape, rental duration choices made by Unica Capital are informed by their commitment to keeping up with the latest research and market data, making strategic decisions based on yield and risk.

Unica Capital’s REIT portfolio prefers the safety of long-term rental investments both commercially and in the residential sector. The preference of an extended lease ensures consistent tenancy over a longer span, minimising the risk of potential income gaps during the search for new occupants.

It’s not just about assured rental income but also about forging relationships with respectful tenants. The stability and predictability intrinsic to long-term rentals, builds a real estate investment strategy that encourages thriving and enduring communities.

Published: August 24 2023
Author: Chloé Roussel

Unraveling the Pros and Cons of Short-Term and Long-Term Real Estate Investments

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