Most London landlords assume short letting — Airbnb, Vrbo, or direct bookings — will outperform a standard tenancy on income. The maths is less obvious than it looks. After Airbnb’s 15% host service fee, cleaning costs, utilities, and the wear a property takes turning over every two to three nights, many Zone 2 and Zone 3 landlords net considerably less per month than they would on a straightforward 12-month AST. Add the Renters’ Rights Act 2025, the abolition of the Furnished Holiday Let tax regime from April 2025, and London’s legally binding 90-day annual cap — and the decision deserves more than a quick calculation on a phone.
Why This Decision Is Harder to Get Right in 2026
Two overlapping policy shifts in the 12 months to mid-2026 materially altered the short-let financial case that many landlords had been running on.
First, HMRC abolished the Furnished Holiday Let (FHL) tax regime with effect from 6 April 2025. Under the old rules, short-let landlords who met the FHL qualifying conditions — 210 days available, 105 days actually let — could deduct mortgage interest in full, claim capital allowances on furniture, and access Business Asset Disposal Relief on a sale. All of that ended. Short-let landlords are now taxed identically to standard residential landlords, with mortgage interest relief restricted to the 20% tax credit that has applied to long-let landlords since 2020.
Second, the Renters’ Rights Act 2025 abolished Section 21 no-fault eviction. This is the detail that drives many landlords to reconsider short letting — losing the ability to end a tenancy without grounds is a genuine change to the risk profile of a long-let AST. But the Act also strengthened Section 8 grounds considerably. Most landlords who understand how the new system actually works conclude that long-letting is not as risky as the initial press coverage suggested. For the full picture of your obligations under the Act, read our guide on what every London landlord must know about the Renters’ Rights Act 2025.
London’s 90-Day Rule: What It Actually Means for Your Property
Under the Deregulation Act 2015 (Section 44), entire properties in Greater London can be short-let for a maximum of 90 nights per calendar year without planning permission. This applies to any residential dwelling used as a short let, not just Airbnb properties. The cap operates per property, per calendar year — 1 January to 31 December, with no rollover. A landlord who uses their property as their primary residence is not affected; the restriction applies only to entire-property lets where the owner is not present. Renting a room in your own home on Airbnb while you live there is not subject to the rule.
Several London boroughs — Westminster, Tower Hamlets, and Southwark among them — have introduced dedicated short-let enforcement teams that cross-reference Airbnb listings against planning records. Westminster has issued planning enforcement notices and fines to non-compliant landlords, and Airbnb now proactively caps booking availability on listed properties in some boroughs once the 90-night threshold is approaching.
The ceiling matters enormously for the income calculation. If your maximum legally compliant occupancy is 90 nights per year, your gross annual income at £150 per night is £13,500 — roughly £1,125 per month. Against a 12-month AST on the same property at £1,800 per month, the long let wins before a single cost is accounted for. Landlords who intend to exceed the limit quietly should be aware that enforcement is active in several boroughs and escalating across others.
The Real Numbers: Short Let vs Long Let Income Compared
The comparison below uses a one-bedroom flat in Hackney, currently achieving £1,850 per month on an AST (Rightmove Rental Tracker, Q2 2026, E8 postcode). Comparable properties in E8 run at approximately £110–£140 per night on Airbnb. The short-let column assumes the 90-day legal maximum at an average of £125 per night.
| Short Let (90-day cap, £125/night avg) | Long Let (AST, 12 months) | |
|---|---|---|
| Gross annual income | £11,250 | £22,200 |
| Airbnb host fee (15%) | -£1,688 | £0 |
| Cleaning (£55/changeover, avg 2-night stays, 45 changeovers) | -£2,475 | £0 |
| Utilities included in short let (est.) | -£1,800 | £0 |
| Net annual income | £5,287 (£441/month) | £22,200 (£1,850/month) |
Outside Zone 1 and the most central Zone 2 postcodes, the 90-day cap makes short letting economically unviable against a standard 12-month tenancy for the overwhelming majority of London properties. Central London is the genuine exception: a one-bedroom flat in Westminster or Kensington at £350 or more per night, at 90-night capacity, can generate £31,500–£45,000 gross — comfortably ahead of many Zone 1 long lets. That calculation justifies the short-let model in a minority of cases. For most London landlords, it does not.
What the Renters’ Rights Act 2025 Changed — and What It Didn’t
Section 21 is gone. Landlords can no longer end a periodic tenancy by issuing a two-month no-fault notice. Any possession claim now requires a qualifying Section 8 ground. The Act strengthened several existing grounds — persistent rent arrears, anti-social behaviour — and added new ones, including a landlord’s intention to sell and a requirement for the property for a family member. Getting possession via Section 8 through the courts takes longer than a Section 21 process did. That is a real change, and landlords should not pretend otherwise.
Periodic tenancies are now the default from the start. All new tenancies granted from the Act’s commencement are periodic. There are no fixed terms. A landlord cannot grant a standard 12-month fixed AST; the tenancy runs month-to-month from day one, with either party able to end it on the correct notice. For landlords who want flexibility, this is actually closer to what a well-run periodic tenancy always offered — but it removes the certainty of a fixed initial period.
The honest practical implication for the short-let decision is this: if your reason for considering Airbnb is primarily fear of being unable to regain your property, it is worth reading the new Section 8 grounds carefully before moving your listing live. Landlords who maintain well-managed properties, keep records, issue notices correctly, and respond to maintenance promptly will find the new grounds workable. Those who are genuinely risk-averse about tenancy security may still conclude short letting is worth the income reduction — but that should be a considered decision, not a reaction to a misread headline.
Mortgage and Insurance: Where Landlords Get Caught Out
Two compliance issues trip up more landlords than any legal question — and both are discovered after the first booking has been taken, not before.
Buy-to-let mortgages. The majority of standard buy-to-let mortgage products do not permit the property to be used for short-term holiday lettings. The prohibition sits in the terms and conditions rather than the headline summary, and many landlords do not read it. Letting a property on Airbnb against the terms of a BTL mortgage is a breach that — if discovered — can trigger a demand to repay the outstanding loan in full. Specialist short-let mortgage products do exist: Skipton Building Society and a number of specialist BTL brokers offer them, though they typically carry higher rates and require evidence of projected short-let income. If you are considering short letting, speak to a mortgage broker before you list, not after.
Insurance. Standard landlord insurance policies cover long-term AST tenants. They do not automatically cover damage caused by short-let guests, platform-mediated bookings, or legal liability arising from a non-resident guest being injured in your property. A dedicated short-let insurance policy — from providers such as Pikl or Superhog — is separate from standard landlord cover and must be arranged before the first booking. Airbnb’s AirCover for Hosts programme provides up to £1 million in damage protection, but this is a platform guarantee, not a regulated insurance product. It has exclusions, a claims process, and limits that differ significantly from an FCA-regulated policy. Do not treat AirCover as a substitute for real insurance.
Tax Treatment in 2026: After the FHL Abolition
The HMRC Furnished Holiday Let regime ended on 6 April 2025. Before that date, qualifying short-let landlords held meaningful tax advantages over long-let landlords. Those advantages no longer exist. All residential rental income — whether from a 12-month AST or a nightly Airbnb booking — is now taxed under the same rules:
- Mortgage interest is not deductible as an expense. You receive a 20% tax credit on finance costs — identical to the restriction long-let landlords have faced since 2020.
- Capital allowances on furniture and equipment are gone. The replacement of domestic items relief applies instead, covering like-for-like replacements only.
- Business Asset Disposal Relief no longer applies to short-let property sales. Capital gains on residential property are taxed at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers — the standard residential CGT rates introduced in the Autumn Budget 2024.
- Pension contributions cannot be funded from short-let rental profits, as they could under the old FHL qualifying rules.
For landlords who switched to short letting specifically to exploit FHL tax advantages, April 2025 removed the primary financial rationale. If you have not had your tax position reviewed since that date, the assumption that short letting remains the more tax-efficient structure almost certainly no longer holds. An accountant who specialises in property tax is worth the cost of a one-hour consultation before you make any structural decision.
Which Model Is Right for Your Property? Three Real Scenarios
Scenario 1 — One-bed flat, Zone 2–3, E / SE / N / SW postcode, buy-to-let mortgage. Long let wins, and it is not close. The 90-day cap limits short-let gross income to roughly £10,000–£14,000 annually at typical Zone 2–3 nightly rates. A 12-month AST on the same property in 2026 will generate £20,000–£25,000 — more than double, before accounting for Airbnb fees, cleaning, utilities, and the higher mortgage rate a specialist short-let product would carry. This is the most common scenario for London landlords. Long-letting is the correct call.
Scenario 2 — High-value property, Zone 1, W1 / SW1 / WC2 postcode, owned outright (no mortgage). Short let is viable. At £350–£500 per night and 90 nights, gross revenue reaches £31,500–£45,000. Without mortgage finance to restrict, the FHL abolition is less damaging — there is no interest deduction to lose. Dedicated short-let management services operating in Prime Central London (Veeve, City Relay, Pass the Keys) handle logistics, cleaning, and guest communications, reducing the operational load significantly. This scenario is real but narrow — it applies to a small proportion of London landlords.
Scenario 3 — Second home or part-time London base. If the property is genuinely your second home and you use it yourself for part of the year, the 90-day rule calculation changes. Your total combined letting nights still cannot exceed 90, but your personal use occupancy nights do not count against the cap. This guide focuses on landlords letting a property they do not personally use; separate planning and tax advice applies to mixed-use second homes.
For a broader picture of how the London market is evolving and what it means for landlord returns, read our overview of what’s coming to the London rental market in 2026. For general operational guidance as a landlord, the London Landlord’s Complete Guide covers referencing, deposit protection, and property management in full.
Practical Takeaways
- Run the 90-day cap calculation before anything else. Outside Zone 1, the income ceiling alone typically makes long letting the higher-return option — often by a factor of two or more.
- Check your mortgage terms before your first listing goes live, not after. A short-let breach can trigger full loan recall.
- The FHL tax regime ended 6 April 2025. If your short-let tax position was built on FHL assumptions, get it reviewed. The advantages are gone.
- The Renters’ Rights Act 2025 is a real change to long-let risk, but the strengthened Section 8 grounds are workable for landlords running legitimate tenancies. Fear of Section 21 abolition alone is not a sound reason to take a short-let income hit.
- If short letting is right for your property, arrange dedicated short-let insurance before you accept a booking. AirCover is a platform guarantee, not regulated insurance cover.
List Your London Property — or Find Tenants — with FTR London
If the numbers point to a long let — and for most London landlords outside Zone 1 they do — FTR London connects landlords directly with verified tenants across all London boroughs. No agency fees, no commission on rent, and your listing reaches renters actively searching in your area. List your property on FTR London and start receiving enquiries.
If you are a renter searching for a home in London right now, FTR London lists properties across every borough — from Hackney and Tower Hamlets to Ealing and Wandsworth. Search available rentals on FTR London and find your next home directly from the landlord.
