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Short-term lets promise higher returns, but estimating real income is harder than it looks. Here is how to do it properly.
In London, the 90-day rule limits short-term letting of entire properties to 90 nights per calendar year without planning permission. From 2025, a national registration scheme requires all short-term rental hosts in England to register. These regulations do not make STR unviable, but you cannot assume unlimited availability when projecting income.
A property renting for £1,500/month on an AST might generate £100-£150 per night on Airbnb. But no property achieves 100% occupancy (typical: 55-80%), and the cost structure is fundamentally different. The honest comparison is gross revenue minus all operating costs vs net rental income from a long-term tenancy.
Average Daily Rate (ADR): The average price per night across all booked nights. Not your listed price -- what guests actually pay after discounts and seasonal adjustments.
Occupancy Rate: Percentage of available nights booked. Highly seasonal -- coastal properties might see 90% in summer and 30% in winter.
Revenue Per Available Room (RevPAR): ADR multiplied by occupancy rate. The single most useful metric because it captures both pricing power and demand.
Basic formula: ADR x Occupancy Rate x 365 = Gross Annual Revenue. But gross revenue is not profit. Costs include:
Cleaning: 15-20% of revenue. Every changeover needs a professional clean.
Platform fees: Airbnb charges 3% (or 14-16% under simplified pricing). Booking.com takes 15%.
Furnishing depreciation: £1,500-£3,000/year on a typical 1-2 bed property.
Management: 15-25% of gross revenue if using a management company.
Utilities: You pay all bills -- gas, electric, water, Wi-Fi.
After all costs, realistic net margin is 40-60% for self-managed and 25-40% for professionally managed properties.
Coastal and rural properties see sharp peaks in school holidays with significant winter troughs. City-centre properties are more stable, driven by business travel and year-round tourism. Understanding the seasonality of your specific market is essential for realistic projections.
UrbanCode's Analyst Agent pulls short-term rental analytics for any UK location. Market search returns ADR, occupancy, estimated annual revenue, active listing count, and a market grade (A to F). Revenue estimation produces projections by market percentile (25th, 50th, 75th, 90th) with monthly breakdowns revealing seasonal patterns.
Supply trend analysis shows how active listings have changed over 36 months -- whether you are entering a growing or stable market. Market outlook provides forward-looking booking pace data for upcoming months.
The result replaces hours of manual research with structured, comparable analytics to make your investment decision with confidence.
Try this yourself at urbancode.ai
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