Short-Term Lets vs Traditional Buy-to-Let: Which Strategy Works Best in 2025?

Introduction

In the ever-evolving world of UK property investment, one question keeps cropping up for landlords and new investors alike: is it better to pursue short-term lets or stick with the traditional buy-to-let route? As we head deeper into 2025, both strategies offer compelling advantages, but each comes with different levels of risk, regulation, and return.

From rising tenant demand to evolving local rules on Airbnb-style rentals, this guide will help you navigate the pros and cons of both options. Whether you’re aiming for maximum yield, low void periods, or hands-off income, understanding the key differences in 2025 could shape your next investment decision.

Key Takeaways
 

• Short-term lets offer potential gross yields of 8% or more in tourist-friendly cities, but come with higher management costs and stricter planning rules
   
• Traditional buy-to-lets provide more stability and long-term tenant retention, with average UK yields between 4.5% and 6.5% depending on region
   
• New licensing schemes and planning restrictions are being rolled out in cities like Manchester, London, and Edinburgh
   
• Location, local demand, and investor goals all influence which strategy performs better in 2025

Short-Term Lets: High Yield, High Effort

Short-term rentals like those on Airbnb or Booking.com have grown rapidly since the pandemic recovery, fuelled by a rise in domestic travel and flexible lifestyles. In hotspots like London, Bath, York, and Manchester, short stays can bring in significantly more income than long-term tenancies especially during peak tourist seasons.

According to data from AirDNA, average daily rates in Manchester were £132 in early 2025, with occupancy averaging 68%. That translates into a projected gross yield of around 8.2% annually for a one-bedroom property near the city centre, before costs.

However, short lets come with more complexity:

• Higher management fees (often 1% to 30% of income if fully outsourced)
   
• Greater wear and tear from frequent guests
   
• Seasonal income fluctuations
   
• Regulation risks, including Article 4 restrictions

In fact, cities like Manchester and London are tightening rules around short lets. Greater Manchester announced in mid-2025 that it is reviewing limits on holiday homes in the Northern Quarter and Castlefield, where housing availability has come under pressure.

Traditional Buy-to-Let: Steady Income, Fewer Surprises

The classic buy-to-let model remains a core strategy for UK investors especially those prioritising stable income, capital appreciation, and less volatility. Letting a property on a 12-month AST (Assured Shorthold Tenancy) often means:

• Predictable monthly rent
   
• Longer-term tenancies (average duration in the UK is 4.3 years according to the English Housing Survey)
   
• Lower ongoing management and cleaning costs

In 2025, average UK rental yields range from 4.5% to 6.5%, depending on the region and property type. Cities like Manchester, Birmingham, and Leeds remain at the top of the charts for consistent rental returns. In Manchester’s M4 postcode (covering the Northern Quarter and Ancoats), Property Investments UK reports average gross yields around 5.9% to 6.1%, supported by strong tenant demand and limited housing stock.

New-build properties in regeneration zones, particularly those near transport hubs and universities, often outperform older stock, with yields creeping towards 7% in some city-centre developments.

What About Regulation? Know Before You Buy

Regulation is the key differentiator between short-term and traditional lets. While traditional buy-to-let landlords must adhere to safety regulations, licensing (in some areas), and compliance with the Renters Reform Bill, the bar is relatively stable and predictable.

Short-term lets, on the other hand, are facing increasing restrictions:

• In London, hosts are limited to 90 rental nights per year without special planning permission
   
• Edinburgh introduced a licensing regime in 2023 for all short-term lets
   
• Wales and Manchester are now following suit with consultations on limiting short-term rentals in high-pressure areas

These restrictions aim to protect local housing supply and reduce community disruption, but they also limit revenue potential for landlords if not carefully managed.

Running the Numbers: A Quick Scenario Comparison

When weighing up the pros and cons of short-term lets versus traditional buy-to-let, it’s clear that the short-term model can offer impressive results for investors who are looking for higher gross income and greater flexibility.

Let’s take a one-bedroom flat in Manchester, purchased at £225,000. With the short-term model, properties can bring in up to £29,000 in annual gross income, compared to around £14,400 for a traditional tenancy. Even after accounting for slightly higher operating costs, the earning potential remains attractive, especially for those targeting high-demand periods such as summer holidays, major sporting events, and corporate stays.

Short-term lets also offer the benefit of adjusting nightly rates to capture market trends, meaning savvy owners can maximise income when demand peaks. With Manchester hosting regular events, concerts, and conferences, occupancy rates can remain strong throughout the year.

Of course, the right management partner makes all the difference. At CasaCity, we help investors tap into both short-term and long-term strategies, ensuring your property delivers the returns and lifestyle flexibility you want. From professional marketing and guest management to compliance and maintenance, we handle the details so you can enjoy the results.

For investors willing to be a little more hands-on (or work with a dedicated management service), short-term lets can outperform traditional rentals especially in high-demand UK cities like Manchester, Birmingham, and London.

How Rothmore Property Can Help

At Rothmore Property, we help you find the right investment strategy to match your goals. Whether you’re looking for high-yield short lets in prime tourist areas or long-term buy-to-lets in regeneration zones, we offer tailored advice and exclusive access to high-performance opportunities.

Our services include:

• Over 60 developments across Manchester, Birmingham, London and other UK cities
   
• Off-market and early-stage project access
   
• Support for both UK-based and international investors
   
• A one-stop-shop from sourcing to completion, including financing and lettings
   
• Bespoke matching based on your goals, whether it's yield, growth, or diversification

Which Strategy Is Right for You in 2025?

There is no one-size-fits-all answer. If you’re targeting high cash flow and can manage the regulatory complexity, short-term lets in the right location can be rewarding. But if you value hands-off stability and long-term returns, traditional buy-to-let still holds strong.

In 2025, location, licensing, and your personal investment style matter more than ever. Do your due diligence, work with trusted experts, and always align your investment approach with your financial goals.