There’s a lot going on in Edinburgh regarding rental markets just now, for both short and long-term rentals. So far, owning property in Edinburgh and renting it out on a short-term basis has been a very viable option, either as a business or on a smaller scale, due to high nightly rates and favourable tax conditions.
However, with new regulations coming into effect in April and with the tourist levy from 2026, coupled with rents in Edinburgh rising by over 30 per cent in the past five years, it’s not unusual for holiday homeowners to reconsider their rental strategy and weigh up the pros and cons of switching to long-term rentals.
If you’re looking at how best to navigate these shifts and to make the best decision for your property, here’s our breakdown of what’s happening and some of the benefits associated with long-term rentals.
Upcoming Changes to Furnished Holiday Let (FHL) Tax Benefits
From 6th April 2025, previous FHL tax advantages will no longer exist which will impact the financial appeal of short-term rentals . This means that property owners will stop benefitting from Capital Gains Tax Relief or from offsetting mortgage interest against profits, potentially increasing taxable income.
The Challenges of Short-Term Lets in Edinburgh
Stricter licensing requirements for short-term lets are making it increasingly difficult for landlords to obtain the necessary permissions. Many property owners are finding that, even when they want to continue offering short-term accommodation, licensing constraints make it unfeasible.
The new Tourist Levy in Edinburgh
The introduction of a tourist levy from 24th July 2026 is also reshaping the short-term rental market. A 5% charge on the cost of paid overnight accommodation will be applied to the first five consecutive nights of a stay at hotels, B&Bs, hostels, self-catering apartments, holiday lets, and even stationary vehicles or boats used as accommodation. The additional charge could deter budget-conscious travellers and have a knock-on effect on the demand for short-term rentals. It could also have an effect on pricing structures, with larger hotels absorbing these costs more easily than smaller, independent short-term lets.
The Advantages of Long-Term Rentals
Given these changes, here are 5 of the key advantages of long-term rentals.
- Lower management fees Short-term lets often come with high management costs, ranging from 30-35% of rental income. Long-term rental management fees are significantly lower. At Chapmans, EGGS receive a further 20% discount too.
- A stable, predictable income Long-term rentals provide consistent rental income throughout the year, with no seasonal fluctuations.
- Reduced costs Tenants cover utility bills, council tax, broadband, TV license fees, and other expenses. Short-term landlords are responsible for these, as well as frequent cleaning and maintenance costs.
- Less wear and tear Generally speaking, fewer tenant turnovers mean less damage to properties and less frequent redecorating and refurbishments.
- Less ‘hands-on’ admin The complexity of obtaining a short-term let license, handling guest communications, and managing check-ins and check-outs, is significantly reduced when switching to long-term rentals.
While short-term lets once provided financial incentives, the new landscape suggests long-term rentals may be a more sustainable and profitable choice in the long run. If you’re unsure about what to do next, Chapmans is always happy to help. Feel free to book a no-obligation discovery session with us.
