Laurence Dollimore
IF you’re wondering why so many landlords are choosing to rent out to holidaymakers instead of long term tenants, the latest figures suggest they can’t afford not to.
According to a new study, homeowners who switch from leasing their properties long term to renting out to tourists can earn up to 622% more in profits.
The eye-opening statistics come from a study carried out by the Espacio Comun Coop cooperative, on behalf of Malaga City Council.
It found that on average, renting out a property long term in Malaga will earn the owner €7,510 per year. However renting it out to tourists will rake in an average of €30,500 per annum.
The stark difference means holiday lets will make an average of 406% more than traditional long term rents.
The study said it means most homeowners will opt to let to tourists because of the ‘attractive’ profits, adding: “Homeowners who have these properties for conventional rental end up using them for Tourist Use, since they will obtain greater benefits.”
It comes just days after the city council announced it would be banning any future licences for tourist flats in 43 of the most ‘saturated’ neighbourhoods, including the historical center, Trinidad, Perchel and El Palo.
The study said the average holiday apartment in Malaga earns €138.3 per night and has a guaranteed occupancy rate of 72% throughout the year.
There are currently more than 11,000 tourist apartments in Malaga city that are registered in the Andalusian Tourism Registry of the Junta (RTA), of which 7,915 are known to be active.
In the Palma-Palmilla district, landlords with tourist flats earn a staggering 622% more in profits compared to those with long term rentals, making it the neighbourhood with the most severe imbalance.
Elsewhere, in the area around Malaga Port, one night in an Airbnb costs on average €179.9, while the average monthly rent is €652 – meaning the profitability increases by up to 574%.
The story is repeated in the historical centre, where rental profits can surge by 461% if homeowners switch to renting to tourists.
In Campanillas, the imbalance stands at 549% and in Churriana, 517%.
Even in the cheapest neighbourhood for tourists, Bailen-Milaflores, the situation is the same. While the average night in a holiday let is €84.2, the average monthly rent is €524. Assuming an average occupancy rate, switching your home to a tourist let would still see your profits surge by 297%.
It all started with too much protection for non paying tenants and squatters. Holiday lets are much more hassle than long term rental. Linen changes, over use of water and electro, less caring occupiers because there’s a relatively small deposit, more disturbance of neighbours, etc. The net return after management costs, owners time, etc is more important and much less of a difference.