What is the Difference Between Tenancy Agreement and Short term Rental Agreement?

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    Whether you manage properties or only rent out one home as a secondary source of income, you’re expected to know it all as a landlord. Whatever the situation, there is frequently one area where people are unclear: what distinguishes a lease from a rental agreement?

    Tenancy agreements and short term rental agreements are frequently used interchangeably to refer to the same item. But the phrase may be used to describe two different kinds of contracts. Tenancy agreements and short term rental agreements are both enforceable legal transactions. But each has a very distinct function. The fundamental distinctions between the two are covered here.

    What is a Tenancy Agreement?

    Many landlords demand that their tenants sign lease agreements prior to moving into a rental home. A tenancy agreement is an agreement between a tenant and landlord that grants the renter the right to occupy a rented property for a predetermined time, usually six or twelve months. The agreement is a binding agreement between the landlord and the renter.

    Residential leases, generally, are agreements between a landlord and a tenant that specify in detail the obligations of both parties, including rent, pet policies, and the length of the lease. Both parties’ best interests may be secured by a solid, carefully thought-out, and well-drafted lease contract since neither can change the terms of the agreement without the other’s written assent.

    What is a Short term Rental Agreement?

    Tenancy agreements and short term rental agreements are extremely similar. The term of the contract is where there are the largest distinctions between the two.

    A short term rental agreement, as opposed to a tenancy agreement, offers occupancy for a shorter period of time, often 30 days.

    Tenancy Agreement vs. Short term Rental Agreement: Pros and Cons

    Depending on the type of landlord-tenant relationship you’re looking for, the benefits and drawbacks of any particular contract fall into a few distinct categories.

    Let’s begin with the pros and cons of a tenancy agreement:

    Pros Of A Lease – A tenancy agreement could be the best choice if stability is your top goal. Because they are designed for secure, long-term tenancy, tenancy agreements are frequently preferred by landlords over short term rental agreements. A more stable rental revenue stream and lower turnover expenses are usually the result from renting to a tenant for at least a year.

    Cons Of A Lease – Nevertheless, once a tenancy agreement is signed, the monthly rent is fixed until the end of the term. A set rental price for 12 months might mean you lose out on a sizable amount of additional revenue from market rises in a region that is developing and where property prices are steadily rising.

    Conclusion on Leases – A tenancy agreement is an excellent alternative for landlords seeking a steady income, but it may have a detrimental influence on profitability if property values increase during that year.

    Let’s now look at the pros and cons of a short term rental agreement:

    Pros Of A Rental Agreement – Because a short term rental agreement is typically just temporary, there is considerably greater latitude for rent increases. Technically, rent can be changed monthly with a short term rental agreement to keep in line with the current fair market rent.

    It’s crucial that your renter is aware that a short term rental agreement gives the landlord the right to raise the rent from month to month.

    For a tenant who can’t commit to a 12-month lease term, a short term rental agreement is suitable.

    Cons of a Renting Agreement – The flexibility of a month-to-month lease, which might subject a renter to frequent rent increases or indefinite rental terms, may frighten away a tenant hoping for a long-term lease. The expenses associated with more frequent tenant turnover, such as those associated with advertising, screening, and cleaning, should also be considered by landlords. Furthermore, if your rental is situated in a neighborhood with lower occupancy rates, you can find it challenging to maintain a long-term tenant.

    Conclusion on Rental Agreement – In regions with high tenant turnover, like college towns, city centres etc a short term rental agreement may be a viable choice for landlords that prioritize flexibility.


    It is crucial that you are aware of who your renter is before you provide a tenancy agreement or short term rental agreement.

    The estate agent will undertake a physical inspection of the property. Before the physical inspection, they investigate the location and analyze the local area to see if anything might influence the value before they arrive at their valuation.

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