Letting out property in London comes with huge potential—strong demand, rising rental values, and a highly mobile population. But to maximise returns and minimise risk, choosing the right tenancy type is crucial. Whether you’re an experienced portfolio landlord or new to the market, the structure of your rental agreement affects everything from how you can regain possession, to what tenants expect in terms of furniture and flexibility.
While a number of tenancy types are legally available, one stands out as the most efficient and protective for the modern landlord: the Assured Shorthold Tenancy (AST). That said, there are circumstances where alternatives—like short lets or lodger agreements—might be considered, but they come with distinct trade-offs.
In this guide, we’ll walk through the key tenancy types used in London’s residential market, including average tenancy lengths, furnishing expectations, and pros and cons—all to help you make an informed decision.
1. Assured Shorthold Tenancy (AST)
🏆 Most common and landlord-friendly tenancy in London
The Assured Shorthold Tenancy is the backbone of the private rental sector and applies to most residential lets where:
- The rent is under £100,000 per year
- The tenant is an individual (not a company)
- The property is the tenant’s main home
- The landlord does not live in the property
This structure is built for clarity, flexibility and legal protection, making it ideal for both landlords and professional tenants.
🔍 Key Features
- Average tenancy length: 12 months, often with a 6-month break clause
- Possession: Can be regained through Section 21 or Section 8 notices
- Deposit: Must be registered in a government-approved scheme
- Rent increases: Limited during fixed term; clear process for review thereafter
- Furnishing: Can be offered furnished or unfurnished, depending on target market
✅ Landlord Benefits
- Streamlined legal processes for ending the tenancy
- Flexibility to adjust rents or terms after the initial fixed period
- Typically attract stable, longer-term tenants
🚩 Things to Consider
- Requires legal compliance (e.g. How to Rent guide, EPC, gas safety certs), but these are now standard expectations in the market.
🔑 Bottom line: For the vast majority of landlords letting in London, ASTs offer the ideal balance of security and flexibility.
2. Short Lets (Holiday or Corporate Lettings)
💸 High income potential, but not without costs
Short lets—ranging from a few nights to a few months—have become increasingly popular, especially in central and high-demand London areas. These tenancies are typically offered through serviced accommodation platforms or directly to corporate clients.
🔍 Key Features
- Average tenancy length: Anything under 6 months, often 1–3 months
- Structure: Usually licences or contractual tenancies, not ASTs
- Furnishing: Fully furnished with everything from beds to crockery and cutlery
- Rent: Charged on a nightly or weekly basis, generally at a premium
✅ Landlord Benefits
- Higher rental yields—weekly rates often exceed AST monthly equivalents
- Flexibility to use the property yourself between lets
- Ideal for prime locations or during peak events (e.g. Wimbledon, business expos)
🚩 Drawbacks
- Increased wear and tear due to frequent changeovers
- Ongoing costs: cleaning, linen service, Wi-Fi, utility bills
- Time-intensive or requires a managing agent for turnover and guest communication
- Local planning restrictions may limit short let durations (e.g. 90-day rule in many London boroughs)
- Higher furnishing and setup costs—you’re expected to provide a hotel-style experience
🔑 Bottom line: Short lets work best for landlords willing to trade stability for higher income, but they come with operational challenges and greater property usage.
3. Lodger Agreements (Excluded Licences)
🏠 For live-in landlords only
If you live in the same property as your tenant, you’ll likely be using a lodger agreement. These are excluded licences, not tenancies, and offer less legal protection to the occupant.
🔍 Key Features
- Average tenancy length: Flexible—often month-to-month
- No deposit protection required
- Shorter notice period (reasonable notice, not defined in statute)
✅ Landlord Benefits
- Greater control over the property
- Easier to remove lodgers without court proceedings
🚩 Drawbacks
- Must share your home—less privacy
- Typically lower rents than self-contained tenancies
🔑 Bottom line: Ideal for homeowners letting out a spare room, not suitable for landlords renting self-contained flats or houses.
4. Company Lets & Contractual Tenancies
🏢 For corporate tenants or rent above £100k/year
When letting to a business or for premium rentals over £100,000 per year, the tenancy won’t qualify as an AST and will fall under a contractual tenancy.
🔍 Key Features
- Often used for relocating employees or serviced accommodation
- No deposit scheme requirement (but advisable to use one)
- Fewer statutory protections for the tenant
🔑 Bottom line: Useful for specific circumstances, but should be carefully drafted with legal guidance.
Final Thoughts: Why ASTs Remain the Smart Choice
London’s lettings landscape is diverse, but for most residential landlords, ASTs provide the best all-round solution:
- ✅ Legal clarity
- ✅ Predictable income
- ✅ Easier management
- ✅ Tenant stability
- ✅ Broad tenant appeal
While short lets can be profitable in the right areas and with the right management, they’re rarely hands-off. And alternative tenancy types are generally suited to niche situations rather than everyday lettings.
If you’re looking for consistent returns, regulatory protection, and manageable expectations, an Assured Shorthold Tenancy remains the safest and smartest way to rent in London.