Temporary vs. long term rental: everything you need to know

More and more homeowners are asking us about the advantages and disadvantages of opting for a temporary rental versus a long term rental. First of all, we would like to make a distinction between long term rental, temporary rental and vacation rental.
Long-term rental, also known as “habitual residence”, refers to the rental contemplated by the LAU (Urban Leasing Law) that has a duration of up to 5 years for individuals, or 7 years for legal entities. On the other hand, temporary or seasonal rentals cover periods ranging from 32 days generally up to 11 months (although technically there is no time limit), and the LAU considers them for “use other than the dwelling”. Finally, vacation rentals are those that are counted per day or per week, and are not regulated by the LAU, but are subject to the tourist activity regulations. In Catalonia, for example, tourist homes must be registered in the Tourism Registry. In this article we will focus on the comparison between temporary rentals and long term rentals. Profitability is the variable that is most often consulted and, logically, is a factor to be considered. Sin embargo, veremos que no es el único elemento que puede (o debe) determinar la decisión sobre cómo alquilar tu propiedad. To simplify the comparison, here are the three main advantages of each type of rental.

Greater flexibility: Because a contract is signed for use other than housing, the period can be defined and negotiated be

tween the landlord and tenant. This gives the landlord the possibility of not being “tied” to a 5-year lease (or 7 years for legal entities) and instead opt for shorter lease

result in a higher return on the rental of the property. However, it is important to take into account variables such as the time the apartment will be empty between contracts, which could reduce the profitability compared to a long-stay rental.

Niche of students and business travelers: There is a high demand from master’s students and business travelers who need accommodation for a few months in a city. These individuals are actively seeking short-stay, furnished apartments with utilities and supplies already included. They are willing to pay more in exchange for comfort and a good location in the city.

Advantages of long term rental

Greater predictability: Because it is a multi-year lease, it allows the landlord to have a clear forecast of profitability and income. It is essential to carry out a thorough study of the potential tenant’s profile in order to avoid problems in the long term. At InversionesBCN we offer non-payment insurance options that give landlords even more peace of mind. Less dedication and no furniture: By having long-term tenants, it will generally not be necessary to provide furniture of your own, and the level of dedication and maintenance required for the property will be minimal compared to temporary rentals.

Lower expenses: Regular housing rentals tend to have lower expenses, since, as mentioned above, they generally do not require own furniture (which will be provided by the tenant), and utilities and supplies (water, electricity, gas, internet) are the responsibility of the tenant. Temporary rentals have gained great popularity recently, mainly due to their higher profitability potential and also driven by the new restrictions on rental prices for regular housing. However, it is important to carry out a thorough analysis that includes all the associated costs and taxes, the effort in maintenance and the risk of having different tenants, among other factors, in order to make an informed decision on what type of rental is desired for the property. At INVERSIONESBCN REAL ESTATE BOUTIQUE, we will be happy to provide you with free, no-obligation advice on your property, so that you can make the most of its potential. In addition, we can also help you with the comprehensive management of your flat, so that you don’t have to worry about anything. You can contact us by email at info@inversionesbcn.com or by calling 931 592 484.