Touristic rental: Is it profitable or not?

Touristic rental: Is it profitable or not?

Long-term and vacation rental has become a profitable business. The latter, in particular, receives greater benefits as long as the house is rented almost every weekend, according to information from the Spanish company "Alquiler Seguro", which recently realized a study to compare this type of rental with the conventional one in the cities of Madrid and Barcelona.

An article published in El País, warns that tourist housing is subject to factors such as the time of year in which we rent, the location of the property and how many days the place will be occupied. It is also very important to keep in mind wich are the incomes, supplies and taxes. The expenses are higher in tourist properties because the payment of services such as electricity, water or internet connection must be paid by the owner of the house. "In addition, the lessor of a property for residential rent can be taxed up to 60% of taxation while in the tourist not, "explains the text.

The results of the study of "Alquiler Seguro", reveal that the houses or apartments destined to the tourist rental in Madrid can achieve to equal the rentability with a residential rent if they manage to reach a minimum occupation of between 15 and 18 nights in a month, always counting on an average of three nights per tourist. The report says that in the case of Barcelona, the properties must be inhabited between 12 and 15 nights.

El País consulted Antonio Carroza, CEO of "Alquiler Seguro", who pointed out that in order to make a holiday rentals flat, more convenient than for conventional locations, "it is necessary to have it occuped for a minimum of nights", a task that, although it seems simple, it is not. "To have the property occupied for 15 nights it is necessary to have tourists every weekend of the month," he added.

At the other extreme, in areas where this pressure is not perceived "there is a mismatch between supply and demand caused by the expectations of some owners," the company's representative added.

The study of the company also concludes that many owners in Spain have ventured into this type of business searching "fictitious returns" and what contributed is to create distortion in the market. Carroza said that this "bad perception" in the localities with the highest tourism pressure, has caused the residential rental incomes increase slightly, "above the natural increases".

Location: In the case of the capital, in the district of Salamanca, a housing for tourist rental will require fewer nights of occupation to match the benefits of long-term rentals. Particularly in that area, a property needs to be inhabited between 12 and 15 nights to reach the rentability data of other leases, according to the El País article. It is followed by the district of the center, where it takes between 15 and 18 days, while in other areas such as Tetuan, the number can reach 21-24 occupancy nights to generate worthwhile profits.

"In Barcelona the minimum necessary occupation is lower. In the analysis it is reflected that in several districts like San Martí and Sants Montjuic are necessary between 12 and 15 nights so that the renting of the houses destined to the touristic rental is profitable. It is followed by the area of Gracia and San Andreu, where it is possible to match the yields if the dwelling has a minimum occupancy of between 18 and 21 nights, "the text indicates. Likewise, occupation increases in areas of the Catalan Coast when summer is approaching.

Requirements and penalties. The portal warns that in Spain there are more than 360.000 places of housing for tourist use and, even then, there is still confusion about the regulations to which they have to stick.

"What causes most problems to the owners of flats, are the regulations of each autonomous community (CCAA). The requirements to register your apartment for tourist use are very different. In some cases, civil liability insurance or registration of clients before the Local Police is requested, in others,  more unusual, it can be required to remain in the same locality as the tenant during his stay. ", clarifies Juan Curbelo Cabrera, boss of the legal department of the portal

For this reason, they recommend to be attentive to these regulations and avoid being penalized with fines of up to 600.000 euros. These types of rentals must respect the General Law for the Defense of Consumers and Users.

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