Advantages and disadvantages of using a property for seasonal rental during COVID-19

Many residents in Spain are opting for seasonal rentals during confinement / Photo by Ralph Kayden on Unsplash
Many residents in Spain are opting for seasonal rentals during confinement / Photo by Ralph Kayden on Unsplash
20 May 2020, Redaction

The COVID-19 state of alarm has been in force for over two months now, a reality that for some citizens living in flats without gardens, terraces or balconies and in the middle of a city can be a challenging task. Travelling to second homes also isn't an option for everyone and for these reasons, the seasonal rental of properties with a garden or pool can be an option to cope with the confinement in desperate situations.

Salvador Salcedo, a partner in the Ático Jurídico law firm, says that they have clients who are demanding seasonal rental homes with more space, green areas or a swimming pool in order to enjoy these months of uncertainty. In fact, he assures that this summer these seasonal rentals for June, July and August will be in high demand, with people wanting to avoid tourist areas and crowds. Let's have a look at all you need to know about this rental option.

How is a seasonal rental different from other types of rental?

Seasonal rentals cover specific needs of the tenant for work, study, holidays, etc. And the difference with traditional renting is that the property is not your permanent home. For this reason, the LAU (Urban Lease Law) includes it among rentals for use other than housing. The contract is governed by the will of the involved parties and, failing that, by the rental regulations.

Salcedo recommends formalising a seasonal rental with the signing of a contract and before this, visit the house to verify that the furniture and appliances are in perfect condition if possible. It is advisable to attach an inventory to the contract of such items. Together with the payment of the rent, the tenant must also pay the deposit, which will amount to two monthly payments to begin with.

Seasonal renting also differs from tourist rentals in that the latter exclusively satisfies leisure needs for a shorter period of time (days or weeks). It also generally offers complementary hotel services, such as cleaning, changing sheets and towels, etc. Furthermore, holiday rentals are governed by their own regulations, not by the LAU.

What are the advantages and disadvantages of renting for the season?

Salvador Salcedo assures that there are owners who are reluctant to put their home in this type of lease because they consider that it is a risk to rent for one, two, three or six months, in view of possible deteriorations in the home that do not compensate for the rent received. But the lawyer adds that the profitability of seasonal rent can be a good incentive.

In Salcedo's opinion, for tenants it can be an interesting choice to get through the confinement in a better way. It will allow them to change their ways and find a home that is suitable for them to spend a season.  Another advantage is being able to adjust its duration to the preferences and needs of the tenant, although the rent is higher than traditional rent, but cheaper than renting a tourist apartment.

Taxation of seasonal renting

This type of lease is exempt from the payment of VAT, meaning the tenant will only pay the rent agreed with the landlord. As for income tax, the owner must pay the income received as a return on real estate capital and the 60% reduction in net income cannot be applied, since it is not qualified as a rental of the tenant's habitual residence.

Both the Treasury and the Central Economic Administrative Tribunal (TEAC) have established that the 60% reduction in income tax does not apply to seasonal rentals or tourist apartments.

Ready to find the house of your dreams?

Ready to find the house of your dreams?

Find houses for sale and long term rentals on idealista