England's Tourist Levy: How Mid-Term Rentals Help London Landlords Dodge the New Nightly Tax

A New Tax Is Coming for Short-Stay Landlords

As of today, the UK government has confirmed plans for an England-wide nightly tourist levy that will apply to hotel rooms, Airbnb listings, and other short-term holiday accommodation. Reported by The Guardian on 10 September 2026, the charge will add a per-night fee to every tourist stay, directly squeezing the margins of landlords who rely on traditional short-let income.

For London landlords already navigating the 90-night rule, rising operational costs, and growing regulatory complexity, this levy is yet another reason to think strategically about how you position your property. The good news? There is a well-established rental segment that sidesteps the levy entirely, commands strong returns, and is growing fast in London: mid-term rentals.

Let's explore how this works, what you need to know, and where the real opportunities lie.

What Exactly Is the Tourist Levy?

The proposed levy is modelled on similar schemes in cities like Amsterdam, Paris, and Barcelona. It applies a per-night charge on top of the nightly rate for accommodation classified as tourist or short-stay. The precise amount per night is still being finalised, but even a modest charge of £2 to £5 per night adds up quickly, especially in a high-volume market like London.

Critically, the levy targets stays that fall under the "tourist accommodation" classification. That typically means bookings of fewer than 28 or 31 consecutive nights, depending on how the final legislation defines the threshold. Stays beyond that window, particularly those in the one-to-three month range, are generally treated as residential lettings rather than tourist accommodation.

This distinction is where mid-term rentals become very interesting.

What Are Mid-Term Rentals and Who Books Them?

Mid-term rentals sit in the sweet spot between traditional short-term lets (one to seven nights) and long-term assured shorthold tenancies (six to twelve months or more). They typically run from one to three months and cater to a very different guest profile.

The most common mid-term tenants in London include:

• Relocating professionals who need a furnished base while they search for permanent housing
• Corporate contractors on fixed-term projects, particularly in finance, tech, and consulting
• Insurance and displacement tenants placed by insurers after property damage such as fire or flooding
• Digital nomads and remote workers spending a month or two in London
• Medical professionals on rotational placements or locum contracts

Demand from these groups has been climbing steadily. London's status as a global business hub, combined with the shift toward flexible working arrangements, means there is a deep and growing pool of tenants who want fully furnished, well-managed accommodation for four to twelve weeks at a time.

Why Mid-Term Rentals Dodge the Levy

Because mid-term stays exceed the short-stay threshold used to define tourist accommodation, they fall outside the scope of the nightly levy. Your property is treated as a residential let rather than a holiday rental, so the charge simply does not apply.

This creates a meaningful financial advantage. On a property earning £150 per night with a £5 levy, the tax alone would cost over £450 across a 90-night period of short-stay bookings. Multiply that across the year and the impact on your net yield becomes hard to ignore.

The Financial Case: Mid-Term vs Traditional ASTs

One concern landlords often raise is whether mid-term rents can compete with the income from nightly short-lets. The answer depends on your property and location, but here is the general picture for a well-located one-bedroom flat in London:

• Traditional AST (12-month tenancy): approximately £1,800 to £2,200 per month
• Mid-term rental (1 to 3 months): approximately £2,800 to £4,000 per month
• Short-term let (nightly via Airbnb): approximately £3,500 to £5,500 per month equivalent, before the levy and operating costs

Mid-term rentals comfortably outperform AST rents, often by 40% to 80%, while involving far less turnover, fewer guest communications, and lower cleaning and linen costs than nightly short-lets.

What Landlords Need to Watch Out For

Mid-term rentals are not without their complexities. Before repositioning your property, consider these key factors:

Tenancy Structure

Stays of one to three months typically fall outside the Assured Shorthold Tenancy framework, but you still need a clear contractual agreement. A well-drafted licence to occupy or a contractual tenancy is essential to protect both parties. Getting this wrong can create legal headaches around eviction rights and deposit obligations.

Furnishing and Presentation

Mid-term tenants expect a hotel-like level of finish: quality furniture, equipped kitchens, fast Wi-Fi, and a move-in-ready experience. This is a higher standard than most AST properties but similar to what short-let landlords already provide.

Void Periods

The biggest risk with mid-term rentals is gaps between bookings. A two-week void between tenants can erode your annual yield significantly. Effective marketing across multiple platforms and maintaining a pipeline of corporate and relocation contacts is essential.

Mortgage and Insurance

Check that your mortgage lender permits short and mid-term letting. Some buy-to-let mortgages restrict stays below six months. Your insurance policy also needs to cover the specific risks of furnished, medium-length tenancies.

The Blended Approach: Where the Real Yield Lives

Here is where things get genuinely strategic. The highest-yielding London properties rarely operate on a single rental model. They blend short-term bookings during peak tourist seasons (spring and summer weekends, major events, holiday periods) with mid-term lets during quieter months when nightly demand drops and void risk increases.

This blended strategy captures the best of both worlds: premium nightly rates when the market supports them and steady, levy-free income from mid-term tenants during the shoulder periods.

The challenge, of course, is execution. Managing a blended calendar means juggling multiple booking platforms, handling levy compliance on the short-stay portion, coordinating guest communications across very different tenant types, and optimising pricing dynamically. For most landlords, this is a full-time job in itself.

This is precisely where professional management makes a transformative difference.

Why Professional Short-Term Let Management Is the Simplest Path Forward

At Airhosts, we have been managing London properties across the full spectrum of short and mid-term stays for years. Our approach is built around exactly the kind of blended strategy that the tourist levy now makes essential.

When you work with Airhosts, your property benefits from:

• Dynamic calendar optimisation that fills peak periods with high-rate short-term bookings and transitions seamlessly to mid-term lets during quieter windows
• Full levy compliance on every short-stay booking, handled entirely by our team so you never have to think about it
• Professional guest vetting and tenancy management for mid-term tenants, including proper contractual agreements
• Consistently high occupancy rates driven by multi-platform distribution and our established network of corporate relocation partners
• Hands-off ownership with transparent reporting, so you see exactly what your property earns without lifting a finger

The tourist levy adds a new layer of complexity to an already demanding regulatory landscape. Rather than spending your weekends researching exemptions and filing compliance paperwork, you could have a professional team doing all of it while actively maximising your income.

Your Property Could Be Earning More, Starting Now

The tourist levy is coming, and landlords who wait to react will feel the margin squeeze first. Whether you want to pivot fully toward mid-term rentals, maintain a short-let strategy with full compliance, or capture the highest possible yield through a professionally managed blend of both, Airhosts is ready to make it happen.

Get in touch with our London team today for a free property income assessment. We will show you exactly what your property could earn, how the levy affects your bottom line, and why hundreds of London landlords trust us to handle everything from guest check-in to tax compliance. Your property is an asset. Let's make sure it is working as hard as you did to acquire it.