The Benefits of Short-Term Rentals Compared to Long-Term Rentals

When it comes to renting out a property, owners have the choice between short-term and long-term rentals. Each option has its advantages and disadvantages, but in recent years, short-term rentals have gained popularity, especially in major tourist cities. This article outlines the main benefits of short-term rentals compared to long-term rentals and helps you understand why many property owners choose this option.

1. Potentially Higher Rental Income

One of the major advantages of short-term rentals is the potential to generate higher rental income compared to long-term rentals. In an attractive market like Paris, renting a property by the night or week can be significantly more profitable than a fixed monthly rent.

Why Is Income Higher in Short-Term Rentals?

Daily rates for short-term rentals are often much higher than what an owner could earn with a standard monthly rental. For example, if a property is rented at €100 per night with an occupancy rate of 75% per month, the owner could potentially earn €2,250 (30 nights x €100 x 75%), compared to a monthly rent of €1,500 for a long-term rental.

Taking Advantage of Peak Seasons

Short-term rentals also allow owners to adjust prices based on the season, local events, or tourist demand. During peak periods, such as holidays, festivals, or major sporting events, prices can be increased, leading to higher revenue.

Example: An apartment in Paris rented during Fashion Week can command significantly higher rates than usual. This is not possible with a long-term rental, where the rent remains fixed on a monthly basis.

2. More Flexibility for the Owner

Short-term rentals offer greater flexibility for property owners, allowing them to rent their property only at specific times of the year while retaining the option to use it whenever they wish.

Retaining the Option to Use the Property

In a long-term rental, the property is continuously occupied by a tenant, meaning the owner cannot use it freely. In contrast, short-term rentals enable owners to use their property during off-peak periods or whenever they need it for personal stays.

Meeting Temporary Needs

If an owner plans to sell the property or carry out renovations, they can temporarily pause the rental without being committed to a long-term lease. This provides greater flexibility in real estate management.

Tip: Short-term rentals are ideal for owners who want to use their property for personal stays part of the year or who do not wish to commit to long-term leases.

3. Lower Risk of Unpaid Rent

One of the biggest risks in long-term rentals is the possibility of unpaid rent, which can lead to costly legal procedures and financial losses for the owner. In short-term rentals, this risk is almost nonexistent.

Secure Upfront Payments

With platforms like Airbnb, Booking.com, or Vrbo, payment is usually made before the guest's arrival. This guarantees that the owner receives rental income in advance. The payment process is managed by the platform, preventing delays or non-payment issues.

Shorter Stays, Lower Risk

In short-term rentals, guests typically stay only a few days or weeks, reducing the risks associated with long-term occupancy by a single tenant. Additionally, if an issue arises with a guest, the limited stay duration means risks are lower compared to a long-term rental, where evicting a non-paying tenant can be difficult.

Tip: Use rental platforms that secure payments in advance to avoid the risk of unpaid rent.

4. Fewer Legal Constraints for Termination

In long-term rentals, the relationship between landlords and tenants is strictly regulated by law. Terminating a long-term lease can be complicated, with strict deadlines and procedures to follow.

Easier Lease Termination in Short-Term Rentals

In short-term rentals, stays are brief, and there is typically no long-term lease agreement. This means owners can stop renting their property at any time without having to go through lengthy legal processes. It offers more freedom to adjust availability dates or even pause the rental temporarily if needed.

No Restrictions from the ALUR Law

In France, the ALUR law imposes many regulations on long-term rentals, including rent controls, notice periods, and lease renewals. These restrictions do not apply to short-term rentals, giving owners more flexibility.

Example: An owner who wants to reclaim their property for personal reasons can easily stop renting it as a short-term rental, whereas with a long-term lease, they must comply with strict legal requirements.

5. Better Maintenance and Regular Property Upkeep

Short-term rentals involve frequent tenant turnover, allowing the owner or property manager to regularly check the property's condition and perform necessary maintenance.

Regular Property Inspections

After each stay, a cleaning service is performed, enabling the detection of any damages or needed repairs early. This helps maintain the property's condition over time, unlike long-term rentals, where inspections usually occur only at the end of the lease.

Faster Repairs

Minor repairs or improvements can be carried out between bookings without disturbing tenants. This helps preserve the quality of the property and prevents significant deterioration that may occur with long-term tenants.

Tip: Hire a concierge or property management service that includes regular cleaning and inspections to prevent property damage.

6. Opportunity to Optimize Taxes

Short-term rentals in France can benefit from favorable tax regimes, especially under the non-professional furnished rental (LMNP) status. This status allows owners to deduct certain expenses and benefit from a tax deduction on rental income.

Micro-BIC or Simplified Real Tax Regime

The Micro-BIC regime offers a 50% tax deduction on rental income, while the real tax regime allows owners to deduct actual expenses (maintenance, management fees, etc.) and depreciate the property. This is often more advantageous than the taxation of rental income from long-term leases.

Tax Deductions for Classified Tourist Rentals

If a property is classified as a “furnished tourist rental”, the owner can benefit from a 71% tax deduction on rental income, significantly reducing taxable income and optimizing financial returns.

Tip: Consult a tax advisor to determine which regime is most beneficial for your situation.

7. A More Rewarding Rental Experience

Short-term rentals allow owners to meet tenants from all over the world, including tourists, business travelers, and expatriates. This diversity makes the rental experience more dynamic and enjoyable.

Engaging with a Diverse Clientele

Short-term tenants come from various backgrounds, making interactions more interesting. Owners can meet travelers eager to explore the city, families on vacation, or professionals on business trips.

Flexibility to Adapt Your Offer

Short-term rentals provide the ability to quickly adjust offerings based on market trends or tenant preferences. Owners can also experiment with additional services (concierge, breakfast, local experiences) to enhance guest satisfaction.

Example: Offering additional services such as a local guide or personalized recommendations can make guests' experiences more memorable and help the property stand out from the competition.

Short-term rentals offer numerous benefits compared to long-term rentals, including higher income potential, greater flexibility, lower risk of unpaid rent, fewer legal constraints, and better property maintenance. They also provide tax advantages and a more engaging rental experience.

However, managing a short-term rental requires more effort, frequent maintenance, and compliance with local regulations. To maximize profitability and ensure a hassle-free experience, property owners can use concierge services or rental management companies.

If you're considering short-term rental for your property, weigh the pros and cons carefully and ensure you comply with local regulations to optimize your rental strategy.