The ‘extended stay’ segment of the Spanish rental market offering accommodation for between one and six months gets more attractive for landlords as the authorities clamp down on holiday-lettings and increase the risks of long-term rentals.
Spain under the control of the left is increasingly a ‘hostile environment’ for second-home owners looking for investment returns. Holiday-rentals are increasingly regulated at a local level in many areas (see this guide to holiday-rental regulations in different regions of Spain), and effectively banned in some hot markets like Barcelona and Palma de Mallorca.
At a national level the left-wing coalition government in Madrid has passed legislation protecting tenants at the expense of landlords, with longer contracts making it harder to evict tenants who don’t pay the rent, whilst planning to introduce rent control measures later on this year. These days, if you are a landlord in Spain, you have to be very careful who you rent to, because the rules are increasingly stacked in favour of tenants.
The Coronavirus pandemic, which is battering Spain particularly hard, will just make things worse. Spain is heading for a severe recession at best, and full on depression at worst, during which time many families won’t be able to pay the rent. The hard-left Podemos faction of the coalition intends to make landlords shoulder all the pain without any help, and is already talking about a moratorium on rental payments for families in financial distress. It would be better for the government to support those families financially so they can pay at least some of the rent until the crisis has passed, as they plan to do in the UK, rather than just transfer the full cost to landlords, many of whom could be ruined by this measure.
At least the Minister for Economic Affairs, Vice President Nadia Calviño, a centrist in the government, urged caution before introducing a moratorium on rentals, pointing out that “on the other side is a citizen, not a bank.” Property market expert Gonzalo Bernardos, an economics professor at the University of Barcelona warns that “You can’t transfer rents from one part of the population to another. I mean, it’s not fair that tenants get to keep the rents that landlords lose.”
Extended stay rentals attractive in comparison
Under the circumstances, the ‘temporary corporate accomodation’ and ‘extended stay’ rental segments look increasingly attractive to landlords once business and travel have resumed some kind of normality.
These segments cater to business people and students and the like who need a place to stay for between one and six months, paying a higher rate than long-term rentals, but lower rate than short-term rentals such as tourists staying for ten days or less.
In a place like Barcelona, where there are lots of business schools, language schools, companies and research institutions, there is plenty of demand for extended stay accomodation in normal times, though perhaps not at an extraordinary time like the present.
The big advantages of extended stay rentals is that rental payments are more reliable, often backed by companies, and you rarely have the problem of clients outstaying their welcome. In areas of strong demand, rental income can also be higher than long-term rentals.
According to a startup called Homyspace dedicated to offering temporary corporate accommodation in various Spanish cities including Barcelona, Valencia, Palma, and Madrid, plus cities in France and Portugal, the supply of homes in Barcelona offered to this segment has increased by 25% in the last few months (pre-coronavirus). They claim that a landlord in the Eixample can earn 1,637€/m on average from extended stay rentals, compared to 1,364€/m from long-term rentals, which translates into almost 3,300€ more per year from extended stay.