What is a short-term rental?
A short-term rental is classified as a business activity conducted under a trade licence, rather than as a rental. You do not need a lease agreement, as the property is used for temporary stays rather than as a home. It is most commonly used for holidays or accommodation during a business trip. A few years ago, this phenomenon experienced enormous growth and enabled many property owners to earn an attractive additional income. However, in 2018, the Financial Administration introduced new rules classifying short-term rentals as a business in the accommodation services sector. This brought new commitments and obligations for landlords, which were not worthwhile for everyone. The question remains whether short-term rentals are still worthwhile, or whether they have become a difficult challenge.
Who benefits from short-term rentals?
If you own an investment property in a touristically attractive location and let it out, a short-term rental may offer you a more attractive return than a long-term rental. Income from a short-term rental usually exceeds that from a long-term rental. Although the off-season may be more challenging, during the busiest periods you can achieve high income that covers any shortfall in the quieter months.
Advantages of short-term rentals
In addition to financial gain, short-term rentals offer other advantages. Firstly, they provide a high degree of flexibility. You can decide at any time that you want to use the property for your own needs. You are not bound by long notice periods and have complete freedom in your decision-making. You can also respond flexibly to changes in the property market without having to wait for a long-term rental to end. Furthermore, you do not have to comply with set limits on rent increases and can set accommodation prices yourself. This also eliminates the risk associated with non-paying tenants, as the rental amount is usually paid in advance when booking.
Disadvantages of short-term rentals
Let us be honest: short-term rentals also have their downsides. First of all, they are a business activity, which entails certain obligations. Short-term rental operators must hold a trade licence and pay tax in accordance with VAT legislation, although this obligation applies only to those who have achieved turnover of at least 1 million Czech crowns over the previous twelve months. You must also account for personal income tax and meet other administrative obligations, such as marking the business premises.
Many also see the time required to manage a short-term rental as a disadvantage. Communicating with guests, checking them in and preparing the flat for the next guests can take up a great deal of time, often approaching a full-time job. If you advertise the flat on an accommodation platform, you must also allow for commission fees.
The solution
The question is whether it would not be more efficient to entrust the management of your flat to professionals. We also offer this service at Bohemian Estates. We lease the flat from you and act as the landlord, taking on all responsibilities, including payments and contributions. Although you pay a commission, the service pays for itself in the long term. Flats under our management generate, on average, 5.2% more income. This means you earn more money annually while saving hundreds of hours. For flat owners in locations with short-term rental potential who do not have time to look after their property, professional management is the ideal solution.