Vacation rentals vs. traditional rentals

Bell Lloc by Alquilair

All of Spain's autonomous communities recorded higher prices than three months ago for rental housing. The highest increase has been recorded in the Balearic Islands, where the price has grown by 15.9%. After Madrid (5.1%), the Canary Islands (5%) and Catalonia (4.9%). Palma is the capital that has grown the most in rental prices during the last quarter, with an increase of 11.4% in the rents of its homes. With these figures it is clear that, right now, renting is a profitable business.

We want to tell you about two different types of rentals to get extra income from your second property. Modalities that allow you to take advantage of this rental growth. This is a practice that has always existed, but not with the boom and growth it has experienced in recent years. Previously, we have given you some reasons why it is better to rent a property than to sell it in Mallorca, but now, we talk about the differences between traditional rentals and vacation rentals. Which is your best option?

Types of contracts for renting my home

1. Traditional Rental

This is a long-term lease and contract. Each month as owner you have a continuity of income, hoping not to fall into defaults of a defaulting tenant. This type of rental is still the main rental alternative to others, precisely because of the continuity. This model implies that if you would like to stop renting the house, you will have to wait four years (three years of mandatory extension and one year of tacit extension), unless the lessor claims to need the property for himself or for the use of first-degree relatives. In any case, the rental housing price market has increased by 8.8% during the first quarter of 2017, leaving the price per square meter at 8.9 euros per month, this according to the rental price evolution report published by idealista.

2. Tourist Rental

The main incentive exhibited by the tourist housing contract, in addition to guaranteeing the freedom of agreement, is the high profitability that it can produce. There is talk of profits that can range from 5% to 25%-30%. Contrary to traditional rentals, vacation rentals, even with the increase in their seasonal nature, are seasonal. In addition to a legal situation that today is uncertain as to what can or cannot be considered as a tourist rental, but that has not stopped the growth of tourist rentals. 14% of tourists in Spain stay in holiday homes, according to data from the Spanish Federation of Tourist Housing (Fevitur) and the ESADE business school. The demand for vacation rental housing is growing every day, and the real estate sector has been positively affected by the vacation rental modality.

All this makes it more and more interesting to keep that other property to rent it. Do you need help in the management of your holiday home? Contact us!