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What is short stay?

Short stay (or "short stay") is the temporary housing of guests in a freehold property for a minimum of 7 nights to a maximum of 6 months.

For real estate investors, short stay is attractive because it has two huge advantages over long-term rentals (>6 months):

  1. Short stay yields higher rental income and therefore higher returns

Short stay guests pay a price per night booked, just like a hotel. With high occupancy rates, short stay operation produces significantly higher rental income than long-term rentals.

  1. Short stay gives more flexibility

Guests stay for a short period of time, which allows you as an investor to retain a lot of flexibility: for example, temporary tenants do not enjoy tenant rights, and depending on supply and demand, you can charge flexible prices.

Is it really that easy to achieve higher returns and more flexibility with short stay?

Unfortunately not: successful short stay operation requires expertise and a number of other prerequisites.


Short stay requirements

  1. Continuous and proactive effort

Because guests are housed for a short period, the number of changes is greater: from a minimum of once every six months to a maximum of once a week. Continuous efforts are required to attract new temporary tenants, facilitate check-ins & -outs and perform regular cleaning.

Betterstays has these qualities: we have good entrances to reputable short stay users and an experienced team that manages guest accommodation.

  1. Occupancy Council

High occupancy is the key to successful short stay operation: only then will there be a return on investment over long-term rentals. Seasonal fluctuations and varying demand complicate this.

However, Betterstays has built a successful track record in which our occupancy is higher than the market average in percentage terms.

  1. Cost of short stay

Short stay is a taxed service and is subject to the 9% VAT rate. In addition, tourist tax is payable (10% in Amsterdam in 2020). Also, fixed charges such as gas/water/light, internet and municipal taxes are not purchased by the temporary tenant but by the owner. The owner must recover these costs by including a user fee in the nightly rate.

Betterstays has calculation methods where we identify the possibility of yield improvement.

  1. Regulation

Short stay rentals are subject to regulations, especially in Amsterdam. For example, only free sector housing qualifies for short stay and no one may be registered at the address. In addition, a short stay permit required, as the activity is seen as commercial exploitation. Unfortunately, the City of Amsterdam has stopped issuing new short stay permits since early 2014.

Despite restrictive measures from the City of Amsterdam, Betterstays has experience with the short stay permit processand can advise on other options for temporary rentals, such as using a hotel permit or registration as a Bed & Breakfast.

  1. Taxation

Short stay exploitation is considered active asset management by the Inland Revenue which means that the income from short stay is taxed in Box I (income from work and home) (if it is an investment property in Box III). This makes it fiscally unattractive to actively exploit your investment property yourself.

Betterstays has a number of clients who have chosen our services for this very reason: after deducting our fee, they are still left with a higher rental result than long-term rentals.

For help or questions contact us here!

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