220,000 Rental Homes Leaving the PRS in 2026: Why Smart Landlords Are Pivoting to Mid-Term and Short-Term Lets

The Great Landlord Exodus Is Officially Underway

The numbers are staggering. According to The Negotiator, landlords are on track to pull more than 220,000 rental properties from England's private rented sector (PRS) by the end of 2026. That's roughly 5% of the entire rental stock, vanishing in a single year.

The triggers are familiar to anyone who owns a buy-to-let in London: the Renters' Rights Act tightening tenant protections, looming MEES (Minimum Energy Efficiency Standards) upgrades that demand costly retrofits, and persistent mortgage rate pressure squeezing margins. For many landlords, the maths simply doesn't work anymore, and selling feels like the only option.

But here's what most landlords aren't hearing: before you list with an estate agent, there's a lucrative window you could be missing. The same supply crunch pushing landlords out is creating extraordinary demand for mid-term rentals, and even greater returns in professionally managed short-term lets.

Let's unpack both strategies so you can make the smartest possible decision with your London property.

What Exactly Are Mid-Term Rentals, and Why Are They Booming?

Mid-term rentals typically cover stays of one to three months, sometimes stretching to six. They sit in a sweet spot between traditional AST tenancies and nightly short-term lets. Think of them as "extended stays" for people who need a real home, not a hotel room, but aren't ready to commit to a 12-month lease.

The demand pool is growing fast, partly because of the very exodus we're discussing:

• Relocating professionals moving to London for new roles who need flexible housing while they find a permanent home
• Insurance-displaced tenants placed by insurers after floods, fires, or building defects (a segment that's expanded significantly in recent years)
• Corporate contractors and project teams on three to six month assignments
• Incoming international workers navigating visa timelines and needing a stable base

When 220,000 homes leave the PRS, all of these groups face even fewer options, which pushes demand (and pricing) sharply upward for the flexible stock that remains.

How Mid-Term Lets Work for London Landlords

Pricing and Yield

Mid-term rentals in London typically command a 20% to 40% premium over equivalent AST rents. A two-bed flat in zones 2 or 3 that might achieve £2,000 per month on an assured shorthold tenancy could realistically generate £2,500 to £2,800 per month on a furnished mid-term basis. Tenants pay this premium willingly because they gain flexibility, a fully furnished space, and often included utilities and Wi-Fi.

Furnishing and Setup

Your property needs to be fully furnished to a good standard. We're not talking about show-home levels of interior design, but comfortable, clean, and well-equipped. A functioning kitchen, quality bedding, fast broadband, and a washer/dryer will cover most tenant expectations.

Platforms and Marketing

Mid-term listings perform well on platforms like SpareRoom (for longer stays), Rightmove's short-let filters, Blueground, Homelike, and even Airbnb's monthly stay category. Corporate relocation agencies are another excellent source of bookings, and companies like Airhosts can connect your property with these demand channels efficiently.

Regulatory Considerations

Here's where it gets important. In London, properties let for fewer than 90 consecutive nights may fall under short-term let regulations and potentially require planning permission. Mid-term lets of 90 days or more generally sidestep this restriction, which is one reason the strategy appeals to cautious landlords. However, you'll still need to ensure compliance with gas safety, electrical safety, and fire regulations. Council tax treatment can also change depending on the length and nature of the let, so check with your local authority.

The Pros and Cons of Going Mid-Term

The Upside

• Higher monthly income compared to traditional ASTs
• No Section 21 complications since you're not granting an AST
• Flexibility to sell whenever you choose, with shorter commitments between you and the tenant
• Quality tenants, as corporate and professional guests tend to look after properties well
• A genuine supply gap you can exploit right now, while thousands of landlords are heading for the exit

The Downside

• Void periods between bookings can eat into your returns if you're self-managing
• Turnover costs add up: cleaning, linen changes, minor repairs, and re-marketing the property every few months
• Self-management is time-intensive, from vetting guests to handling check-ins and resolving maintenance issues
• Pricing requires active management, as rates fluctuate seasonally and you need to stay competitive
• Furniture depreciation is a real cost that many landlords underestimate

The honest truth? Mid-term lets are a solid strategy, but they work best when you treat them as an active business rather than a passive investment. The landlords who struggle are the ones who expect AST-level simplicity with short-let-level income.

Why Short-Term Lets Often Outperform Mid-Term, Especially in London

If you're already considering the jump from traditional lettings to something more flexible, it's worth looking at the full picture. Short-term lets (nightly and weekly stays) in London consistently outperform mid-term rentals on a per-night basis, often by a significant margin.

A well-managed short-term let in a strong London location can generate 50% to 100% more annual revenue than an equivalent AST, and 20% to 40% more than a mid-term strategy alone. The key word there is "well-managed."

Short-term lets require dynamic pricing, professional photography, rapid guest communication, seamless check-in systems, regular cleaning, and compliance with the 90-day rule in London boroughs. It's a hospitality business, and doing it yourself alongside a day job is, frankly, exhausting.

That's precisely where professional management transforms the equation.

The Hands-Off Alternative: Let Airhosts Handle Everything

At Airhosts, we specialise in turning London properties into high-performing short-term lets, without landlords lifting a finger. Our team manages every element of the process: listing optimisation, professional photography, dynamic pricing, guest screening, 24/7 communication, cleaning, linen management, maintenance, and full regulatory compliance.

The result? Our landlords typically earn significantly more than they would through ASTs or self-managed mid-term lets, with none of the operational headaches. And because we blend short-term stays with strategic mid-term bookings during quieter periods, we minimise void nights and maximise your annual yield.

For landlords who are thinking about selling simply because the hassle of being a landlord has become unbearable, professional short-term let management offers a compelling alternative. You keep your asset (and its long-term capital appreciation), while someone else runs the business on top of it.

Don't Sell Into the Exodus. Profit From It.

The 220,000 properties leaving the PRS this year represent a once-in-a-generation supply shock. Demand for flexible, furnished accommodation in London isn't going anywhere. If anything, it's accelerating. The landlords who will come out ahead aren't the ones rushing to sell into a crowded market. They're the ones repositioning their properties to capture premium rental income while everyone else heads for the door.

Whether you're leaning towards mid-term lets or want to explore the higher returns of fully managed short-term lets, now is the time to act. Get in touch with Airhosts today for a free property assessment and find out exactly how much your London property could be earning. No obligation, no jargon, just clear numbers and a plan that works for you.