London landlords entering 2026 face a stark choice. The traditional Assured Shorthold Tenancy (AST) model that powered Buy-to-Let for two decades is now squeezed on every side: Section 24 mortgage-interest relief has been fully unwound for higher-rate taxpayers, EPC-C minimums loom, and rental growth has moderated to the low single digits in Zones 1 and 2. Meanwhile, the Hybrid-Let model — a legally-compliant blend of short-let, mid-term corporate stays, and flexible long-term periods — has quietly doubled the monthly gross that prime postcodes can deliver. This post breaks down the actual numbers, the tax treatment, and the operational realities, using a live Canary Wharf 2BR as the reference property.
What is Hybrid-Let?
Hybrid-Let is a single operating model that routes a property through three distinct guest channels in sequence, maximising occupancy while respecting London's 90-night short-let cap. A typical month might include 10–15 nights on Airbnb or Booking.com at short-stay nightly rates, a 14–30 night mid-term corporate booking at a discounted but still premium nightly, and a handful of flexible long-stay periodic nights to plug any remaining gap. The property is furnished to a hotel-adjacent standard, dynamically priced, and professionally cleaned between stays.
Crucially, Hybrid-Let is not the same as unregulated Airbnb. It is a compliance-led operating model: the Greater London Authority's 90-day cap on short-lets is treated as a design constraint, not a grey area. The remaining 275 nights are filled with stays of 91 nights or more, which fall outside the short-let regime entirely.
Traditional Buy-to-Let yields in London, 2026
The gross yield picture for a vanilla AST in prime London remains modest. Against prime-postcode capital values, the headline gross yield on a long let is thin to begin with — and once you subtract lender interest (at 2026 rates), service charge and ground rent, letting agent fees, insurance, maintenance reserves, and voids, the net yield on a mortgaged flat shrinks to a fraction of the headline figure.
Postcode-level rent bands move quarter to quarter, so we do not freeze them into a blog post. For a current, sourced view of your own postcode — built from AirDNA's London data, the ONS private-rent index, the Rightmove House Price Index and our flagship calendar export — run the yield estimator at /owners/yield-estimate; the full source list is published under the tool.
The headline problem: Section 24 means a higher-rate taxpaying landlord pays income tax on revenue, not profit, with mortgage interest only partially rebated at 20%. For many mortgaged BTL investors in London, the net-of-tax yield is already marginal and the capital growth outlook modest. The model is running out of road.
The Hybrid-Let uplift — the actual maths
Here is what a Hybrid-Let looks like on the same E14 2BR, from one of our managed units operating since May 2025:
| Channel | Nights | Avg nightly | Gross |
|---|---|---|---|
| Short-let (Airbnb / Booking.com) | 12 | £225 | £2,700 |
| Mid-term corporate (30-night block) | 14 | £115 | £1,610 |
| Flex long-stay periodic | 4 | £120 | £480 |
| Total | 30 | — | £4,790 |
The same property on AST grosses £2,600/month. The Hybrid-Let uplift is £2,200/month, or £26,400/year — before accounting for the management fee. Apply our 10% full-service fee (0% in month 1 for the Founding 10 cohort) and the owner still nets ~£4,320/month, or ~£20,640 additional per year versus AST. If you manage yourself and use Big Ben's platform on a reduced onboarding fee, the spread is wider.
"We don't sell tenants a dream. We sell owners a spreadsheet. The uplift is real because it's a blend of three legal channels, not a single grey-area bet."
Tax implications — where Hybrid-Let wins
The tax treatment is the most under-appreciated driver of the Hybrid-Let advantage. HMRC's Furnished Holiday Lettings (FHL) regime was abolished from 6 April 2025, so short-let income is now taxed as ordinary property income. However, Hybrid-Let is not purely short-let — the mid-term and long-stay components are treated as standard rental income, and the underlying structure still leaves several meaningful levers:
- Revenue on mid-term stays (31+ nights) is ordinary property income, directly comparable to AST.
- Short-let revenue is now subject to the same Section 24 restriction post-FHL abolition — but the gross is high enough that even at marginal rates the landlord retains more.
- Furniture, white goods, linen and consumables are deductible operating costs at current-year write-off; this is larger than in an unfurnished AST.
- Operating as a limited company (SPV) sidesteps Section 24 entirely — the Hybrid-Let's higher turnover often justifies the SPV overhead, which an AST rarely does.
Regulatory: the 90-day rule, in one paragraph
Section 25 of the Deregulation Act 2015 permits short-term letting of a London residential property for up to 90 nights per calendar year without planning permission for change of use. Stays of 91 nights or more by a single guest, or any stay that forms part of an ordinary tenancy, fall outside the 90-day count. Hybrid-Let's design brief is simple: keep short-let nights under 90, fill the rest with compliant mid and long stays. We've written a separate deep-dive on the rule — see the link at the bottom.
Case study: Canary Wharf 2BR, live numbers
The reference property throughout this post is a real 2-bedroom Thames-view apartment in E14, managed by Big Ben Suite since May 2025. Running performance over the ledgered period (May 2025 to April 2026):
- Occupancy: ~87% blended
- Guest rating: 4.74★ across 176 verified reviews (170 Airbnb + 6 Booking.com)
- Gross revenue: £4,800/mo average
- AST benchmark (same building, same floorplate): £2,600/mo
- Annual uplift, gross: +£26,400
- Compliance: EPC B, Gas Safety to 2027, Electrical to 2027, short-let nights tracked against 90-day cap
The full-service package for this owner includes professional photography, dynamic pricing against the corporate comp-set, hotel-grade linen rotation, smart-lock self-check-in, and monthly statements. The owner receives one payment per month and does not interact with guests.
Risks — what can go wrong
Hybrid-Let is not risk-free. The failure modes cluster in three areas:
- Operational: turnover cleans, linen logistics, and guest communications are high-touch. A poorly-run Hybrid-Let can score 4.3 stars and rank below the comp-set, collapsing occupancy.
- Compliance: a self-managing owner who loses count of short-let nights can trigger enforcement action and fines of up to £20,000 per offence.
- Demand: corporate-heavy postcodes like E14 depend on finance and tech hiring cycles. A severe downturn compresses mid-term nightly rates before it hits AST rents.
The mitigation in every case is the same: a professional operator with real-time compliance tracking, diversified channel mix, and a defensible pricing engine. The model works; the execution is non-trivial.
The furnishing and capex question
One line Hybrid-Let tables routinely omit is the initial furnishing spend. A 2BR flat in a concierge building needs a serious upfront outlay on furniture, white goods, linen, smart-lock hardware, and soft-furnishings to reach the standard that drives 5-star reviews — quoted property-by-property, because it depends entirely on what the flat already has. Set against the annual uplift above, it is a first-year cost, not a recurring one. Owners who already have a furnished flat skip this step entirely. Owners who are moving out of an AST where the previous tenant took the furniture face the full capex line. Any honest pro-forma for a switch must include this line, not hide it.
Conclusion — who should switch?
Hybrid-Let is the right answer for owners of furnished-ready or furnishable flats in Zone 1 and 2 London, where the short-let ADR is at least 2.2x the long-let nightly equivalent. For owners outside those postcodes, or for unfurnished family houses in the outer zones, traditional AST remains the sensible base case. The best way to find out which camp your property falls into is to run the numbers on your actual address — the calculator at the end of this post takes about 30 seconds.
One final observation. The owners who benefit most from Hybrid-Let are not the ones chasing yield for its own sake — they are the ones who want reliable, hands-off income from a London asset while living elsewhere. The owners we're built for live outside the UK — Istanbul, Dubai, Hong Kong, Singapore — and want a single monthly statement, a compliant operation, and a WhatsApp number they can call. The uplift is the hook; the operational reliability is the reason they stay for year two, year three, year five. If that profile matches yours, switching is rarely the wrong call.
