Property owners looking to rent their property often face a crucial choice: should they opt for a short-term or long-term rental contract? This decision can impact not only the income generated but also the daily management of the property. To help guide you, we’ve prepared a detailed comparison of these two types of leases, highlighting the advantages and disadvantages of each.
Short-term rental contracts
A short-term rental contract has a maximum duration of 30 days, as set by Law D.L. 50/2017. While these contracts don’t require registration due to their short length, it is necessary to report guest information to local authorities. Short-term rentals are typically chosen in tourist locations or areas with high demand for temporary accommodation, such as city centers and university towns.
Advantages
- High Income Potential: Daily or weekly rental rates, especially in high-interest tourist areas, can generate higher income than monthly leases.
- Flexibility: The owner can decide to use the property personally or for other purposes when it’s not rented.
Disadvantages
- Intensive Management: Short-term rentals require constant attention, with frequent guest turnover, cleaning needs, booking management, and support.
- Local Restrictions: Some cities and building regulations impose restrictions on short-term rentals to reduce disruptions for permanent residents.
Long-term rental contracts
Long-term rental contracts, typically structured as “4+4” or “3+2” agreements, provide stability for both landlords and tenants, allowing for a longer-term relationship. This type of contract requires mandatory registration with the Revenue Agency, which entails specific tax and legal obligations.
Advantages
- Income Stability: Long-term rentals guarantee a predictable and steady income flow, particularly valuable in uncertain economic conditions.
- Simplified Management: Once the contract is signed, the landlord doesn’t need to manage bookings, cleaning, or frequent communication with guests.
Disadvantages
- Limited Flexibility: The owner has less freedom to reclaim the property for personal use.
- Lower Income Potential: In tourist areas, income from a long-term rental may be lower than what could be obtained from short-term leases.
What’s the best choice for you?
The decision between short-term and long-term rentals depends on various factors, from financial goals to personal preferences and time availability for property management.
- Income Goals
- Short-Term Rental: If your goal is to maximize earnings by leveraging tourist interest or high temporary demand, short-term rentals could be the most advantageous option. This type of lease often allows for higher monthly income, although it doesn’t guarantee long-term stability.
- Long-Term Rental: If you prefer a stable and predictable income source, a long-term rental is more secure. This type of contract offers a steady revenue stream, ideal for owners who favor a fixed income without seasonal fluctuations.
- Management Time and Effort
- Short-Term Rental: This solution requires more intensive management, both for frequent guest check-ins and regular property maintenance. It’s suitable for those who can dedicate time and attention or are willing to hire a professional manager.
- Long-Term Rental: Once the property is rented, daily management is minimal, as tenants tend to settle in for longer periods. This option is ideal if you have limited time or prefer a less hands-on approach to property management.
- Property Flexibility and Availability
- Short-Term Rental: Perfect for those who want to keep the freedom to use the property at will. If you want to access the property throughout the year, short-term rentals offer greater control over availability.
- Long-Term Rental: If you don’t have specific needs for using the property in the short term, long-term rentals are a simpler, less demanding choice in terms of time and bureaucratic requirements.
- Location and Market Demand
- Short-Term Rental: In tourist cities or areas with high temporary demand (such as university towns or business centers), short-term rentals can generate substantial income.
- Long-Term Rental: In residential or less tourist-driven areas, long-term contracts ensure stable occupancy and make it easier to find long-term tenants, ensuring continuous rental.
It’s essential to carefully consider your personal needs, long-term goals, and the characteristics of the local market before deciding which type of lease to use for your property.
