£5,000 a month in service charges, council tax, and insurance. Zero income. That is the cost of holding an unsold two-bedroom unit in a Zone 1 new-build development. Multiply by twelve months and the carrying cost exceeds £60,000 before a single tenant or buyer walks through the door.

Most developers treat this as a cost of doing business. It doesn't have to be.

New-build stock is structurally ideal for short letting. The units are furnished (or spec-ready for furnishing), brand new (no legacy maintenance), and unoccupied (no existing tenancy to manage around). A professionally managed short-let programme can convert holding cost into net income from the point of practical completion, with no long-term commitment and full flexibility to sell or long-let individual units as the market moves.

Why New Builds Outperform in Short Lets

Short-let guests pay for condition. A brand-new apartment with contemporary finishes, integrated appliances, underfloor heating, and a working concierge desk commands a rate premium that older stock cannot match without significant capital expenditure. In Prime Central London, that premium is material: a new-build one-bedroom in Zone 1-2 typically achieves 20-30% higher nightly rates than a refurbished period conversion of equivalent size in the same postcode.

The operational advantages compound from there. New builds come with manufacturer warranties on appliances and building systems, reducing maintenance cost and response time. Building management is already in place. Fire safety, electrical, and gas certifications are current. Insurance is straightforward to place. And because the units have never been occupied, there is no wear to remediate before listing.

For developers holding multiple units in the same building, the economics improve further. Bulk onboarding (photography, listing creation, pricing calibration) is faster per unit. Cleaning teams can be dedicated to the building rather than dispatched across postcodes. Key management is centralised. Guest check-in can be coordinated with a single concierge desk. The unit cost of management drops with scale in a way that scattered single-property portfolios cannot replicate.

The Yield Comparison

Take a one-bedroom new-build in a concierge development, Zone 1-2, purchase price around £750,000. Three scenarios:

Scenario 1: Left empty. Annual holding cost of approximately £50,000-£65,000 (service charge, council tax, insurance, utilities on standby). Net income: negative.

Scenario 2: Long-let tenancy. Achieved rent of approximately £2,600 pcm (£31,200 annually). After void periods, management fees at 15%, and maintenance, net income lands around £24,000-£25,000. Reasonable, but the unit is locked into a twelve-month tenancy and cannot be sold with vacant possession until the term expires.

Scenario 3: Professionally managed short-let (hybrid model). 90 nights of short lets during peak season at £220-£250 per night, plus medium-term corporate lets for the remaining calendar. Gross income in the range of £45,000-£55,000. After an all-inclusive management fee of 20% (15% on a fixed term), net income of approximately £36,000-£44,000. And critically, the unit can be withdrawn from the programme with notice when a buyer is found or a long-let tenant is preferred.

The income differential between a hybrid model and a long let is typically 50-60%. Against an empty unit, the comparison is not a comparison at all.

How It Works Operationally

Developers care about two things: speed to income and minimal disruption to the building.

Speed to income means bulk onboarding. For a development of ten or twenty units, a professional operator should be able to photograph, list, price, and activate all units within 30 days of practical completion (assuming furnishing is complete). The onboarding process is templated at building level, with individual listing content tailored per unit based on floor, aspect, and layout.

Minimal disruption means operational discipline. Guest access should be managed through the building's existing concierge or a smart lock system compatible with the building's security infrastructure. Cleaning teams should be scheduled (not ad hoc) and familiar with the specific building's access protocols, bin stores, and service lifts. Noise monitoring should be deployed as standard. Building management should have a single point of contact at the management company, not a different host for every unit.

For developers, the reputational risk of short letting is concentrated in one scenario: a badly managed unit that generates complaints from long-let residents or owner-occupiers in the same building. Professional management eliminates this by applying hotel-grade operational standards (daily housekeeping, guest vetting, 24-hour response) that actually reduce the impact on neighbours compared to a conventional long-let tenant who is unmanaged between quarterly inspections.

The Leasehold Question

This is the section most operators skip. Belmont doesn't, because getting this wrong can void the lease.

Many London new-build leases contain covenants restricting lets below a minimum term (commonly six or twelve months) or prohibiting use other than as a private dwelling. A succession of short-stay guests has been found by the Upper Tribunal to breach "private dwelling" covenants even where the letting does not constitute a trade or business. The freeholder can enforce this, and in serious cases, can seek forfeiture of the lease.

This does not mean short letting is impossible in new builds. It means the lease must be reviewed before a single night is booked.

Some new-build leases are permissive (particularly in developments marketed to investors). Some can be varied with freeholder consent. Some contain carve-outs for professional management or serviced accommodation use. And medium-term lets of 90+ nights typically fall outside restrictive covenants because they constitute standard residential occupation.

A credible management company will review the lease as a condition of onboarding, advise on what is and is not permissible, and structure the letting strategy around the actual covenant wording rather than hoping the freeholder doesn't notice. If the lease prohibits short lets outright and the freeholder will not grant a licence, the right answer is a medium-term-only strategy or a long let. Not a breach.

The 90-day rule is the planning constraint. The lease is the contractual one. Both must be satisfied.

Flexibility: Short Lets as a Bridge

This is the point most relevant to developers holding stock for sale.

A short-let programme is not a permanent commitment. It is a bridge strategy that generates income while the developer retains full flexibility over the unit's future. Unlike a twelve-month AST (which locks the unit into a tenancy and prevents sale with vacant possession), a short-let or medium-term let can be wound down with 30-60 days' notice. When a buyer is found, the unit is returned to vacant possession and the management agreement terminates.

For developments where some units sell quickly and others sit, this means the unsold stock is earning rather than costing, without compromising the developer's ability to complete sales on their timeline.

The same logic applies to build-to-rent developers testing demand in a new scheme, or investor-owners who want to hold a unit for capital appreciation while generating income in the interim. The short-let model is inherently flexible in a way that conventional tenancies are not.

The Belmont Collection operates exclusively in Prime Central London (Knightsbridge, Mayfair, Belgravia, and Kensington & Chelsea). Leasehold guidance in this article is for general information only. Developers should obtain legal advice on specific lease terms before commencing any letting programme.