Rent Arrears Are Surging: Why London Landlords Are Switching to Mid-Term Rentals in 2026

Record Rent Arrears Are a Wake-Up Call for London Landlords

If you're a London landlord relying on traditional assured shorthold tenancies, Q1 2026 has delivered some sobering news. Rent arrears have hit a new record high, with data from Reposit revealing that nearly 10% of private renters are now paying over 70% of their income on rent. That's not sustainable, and the cracks are showing. Landlords are putting roughly 700 rental homes up for sale every single day, many of them simply exhausted by the stress of chasing payments and dealing with tenants who, through no fault of their own, simply cannot keep up.

At the same time, the Renters' Rights Act has made the eviction process slower and more complex, meaning that when arrears do build up, it takes longer and costs more to resolve the situation. The old "guaranteed rent" model, where agents promised landlords a fixed monthly income on long lets, is buckling under the weight of tenant-side financial pressure.

So what's the alternative? Increasingly, savvy London landlords are turning to mid-term rentals, specifically targeting corporate and relocation tenants, as a way to eliminate arrears risk while actually increasing their income. Let's break down exactly how this works, what you need to know, and where the real opportunity lies.

What Are Mid-Term Rentals and How Do They Work?

Mid-term rentals typically refer to furnished lets with stays ranging from one to six months. They sit in a sweet spot between traditional long-term tenancies and short-term holiday lets. The target audience is very different from your typical AST renter: think corporate relocations, project-based professionals, international executives, insurance-displaced families, and employees on temporary London assignments.

Here's the key difference. These tenants are almost always backed by their employer or a relocation agency. The rent isn't coming out of a stretched personal budget. It's a corporate expense, often paid upfront or invoiced directly to a company with a healthy balance sheet. That single shift in who's paying changes the entire risk profile of your property.

At Airhosts, we've seen a significant uptick in landlords enquiring about this model, and for good reason. When your tenant's employer is footing the bill, the conversation around arrears simply disappears.

The Genuine Advantages of Mid-Term Lets

Arrears-Proof Income

This is the headline benefit. Corporate and relocation tenants are pre-vetted, solvent, and employer-backed. You're not relying on an individual tenant's ability to juggle rent alongside rising living costs. Payment is reliable, often made in advance, and contractually guaranteed by a corporate entity.

Higher-Quality Occupants

Corporate tenants tend to treat properties with more care. They're typically professionals who expect a high standard and maintain one in return. Wear and tear is generally lower, and the likelihood of disputes or property damage drops significantly.

Better Yields Than Traditional ASTs

Furnished mid-term lets in London command a premium over unfurnished long-term rentals. Depending on the area and property type, landlords can see 20% to 40% more income per month compared to a standard AST, because corporate tenants are willing to pay for quality, convenience, and flexibility.

No Exposure to the Renters' Rights Act Eviction Process

Mid-term lets on licence agreements or company lets fall outside the scope of many AST-specific regulations. While you still need proper legal agreements, you avoid the prolonged eviction timelines that are currently causing so much grief for traditional landlords.

What Landlords Need to Watch Out For

Mid-term rentals aren't without their challenges, and it's important to go in with your eyes open.

Void Periods Are Real

Unlike a long-term AST where a tenant might stay for two or three years, mid-term lets naturally involve turnover. Between bookings, you may have gaps of a week or two (sometimes longer), and those voids eat into your annual yield. Managing this effectively requires consistent marketing, strong relationships with relocation agencies, and excellent listing visibility.

Furnishing and Setup Costs

Corporate tenants expect a fully furnished, well-equipped property. That means quality furniture, fast Wi-Fi, a fully stocked kitchen, and professional-grade cleanliness. The upfront investment can be substantial, and you'll need to budget for ongoing maintenance and replacement of items.

Management Intensity

Every changeover requires professional cleaning, linen changes, inventory checks, and sometimes minor repairs. If you're managing this yourself, it can quickly become a second job. And if you're not responsive and professional, corporate agencies won't rebook with you.

Finding the Right Tenants Consistently

Accessing the corporate and relocation market isn't as simple as listing on Rightmove. You need visibility on platforms like SilverDoor, Situ, AltoVita, and Airbnb for Work, as well as direct relationships with relocation companies. Building this pipeline takes time and expertise.

When Mid-Term Becomes Complex, Short-Term Lets Shine

Here's where things get interesting. Many landlords who explore mid-term rentals eventually realise that the operational demands are surprisingly high for the returns on offer. You're doing much of the same work as a short-term let operator (furnishing, cleaning, managing turnovers, marketing across multiple platforms) but with lower nightly rates and longer void periods.

Short-term lets, when professionally managed, take the same operational model but amplify the returns. A well-located London property on Airbnb and Booking.com can significantly outperform both traditional ASTs and mid-term lets, often generating 30% to 60% more annual revenue. The key word here is "professionally managed," because doing it yourself is genuinely demanding.

This is exactly where Airhosts comes in. As a specialist Airbnb and short-term let management company based in London, Airhosts handles everything: professional photography, dynamic pricing, guest communications, cleaning, linen, maintenance, and compliance. You get the premium yields of short-term letting without any of the operational headaches.

The Smartest Landlords Are Choosing Hands-Off, High-Yield Income

The Q1 2026 arrears crisis is a clear signal. The traditional rental model in London is under real pressure, and landlords who don't adapt risk falling behind. Mid-term corporate lets are a solid step in the right direction, offering better tenants and more reliable income. But for landlords who want to truly maximise their returns without getting buried in management tasks, professionally managed short-term lets represent the clearest path forward.

With Airhosts managing your property, you get the best of every world: high occupancy, premium nightly rates, pre-vetted guests, and zero operational stress. No chasing arrears. No drawn-out eviction processes. Just consistent, optimised income deposited into your account every month.

If you're a London landlord who's tired of arrears risk and ready to see what your property could really earn, get in touch with the Airhosts team today. Your property deserves to work harder for you, and so does your management company.