How Rent-to-Rent Works and the Risks Involved
In recent years, more people have been exploring creative ways to earn extra income, and one of the most talked-about strategies online is Airbnb investing. Social media success stories make it sound effortless: rent a property, put it on Airbnb, and enjoy high nightly rates.
But is it really that simple? And what risks should you understand before getting involved?
What Is “Rent-to-Rent” or “Airbnb Arbitrage”?
“Rent-to-rent” (also known as “Airbnb arbitrage”) is where someone:
1. Rents a property long-term from a landlord
2. Furnishes and sets it up for guests
3. Lists it on Airbnb or short-stay platforms
4. Keeps the difference between the rent paid to the landlord and the income received from guests
Basic example:
Rent paid to landlord: £1,500/month
Airbnb income: £3,000/month
After bills, cleaning, fees: £800–£1,000 profit
On paper, it sounds simple. In reality, there’s much more to consider.
the pros & Cons of rent-to-rent investing
The Pros
Low start up cost
You don’t need to buy a property. Only pay the deposit, furniture, and setup.
Quick cashflow potential
If the location is great and demand is high, income can start almost immediately.
Scalable model
Once you understand the systems, some people expand to multiple units.
The Cons (and What Most People Overlook)
You’re still liable for rent every month
Even if you get zero bookings.
Landlord permission is essential
Sub-letting without written consent can breach tenancy agreements and lead to eviction.
Regulation is tightening across the UK
Many cities now require:
Short-let licences
Planning permission (C5 / C6 use classes)
Restrictions on the number of days a property can be short-let
Rules vary significantly by council.
It’s a hospitality business, not passive income
Guest messages. Late check-ins. Cleaning schedules. Maintenance. Reviews. Complaints.
It requires daily attention.
Tax and accounting responsibilities
Profits are subject to tax
Once turnover hits around £90,000, VAT registration may be required
Insurance and compliance costs can add up
Rent-to-rent is essentially running a small hotel operation and must be treated like one.
A More Realistic Example
Let’s say you rent a modern apartment in a popular city centre for £1,500 per month.
Your monthly costs might include:
Rent: £1,500
Cleaning: £300
Utilities & WiFi: £200
Consumables & small repairs: £100
Airbnb fees: £150
Insurance & contingency: £100
Total costs: £2,350
If your Airbnb revenue is £3,200 during a busy month, your profit might be:
£850–£1,000
But if bookings slow or you get a few poor reviews, revenue could drop to £1,800–£2,200 — putting you at break-even or even a loss.
Rent-to-rent can work, but it’s far from guaranteed.
Airbnb and rent-to-rent investing can generate real income
but only when approached with research, realistic expectations, and proper permissions. It’s not passive.
It’s hands-on, time-intensive, and highly regulated and income can fluctuate month to month.
For anyone considering it, understanding the responsibilities, legal requirements, and potential risks is essential before getting involved.
Disclaimer
This article is for general educational purposes only and does not constitute financial, legal, tax, or investment advice.
Short-let rules and property regulations can change quickly and vary by location.
Always carry out your own research and consider speaking to a qualified professional before making financial or business decisions.
