The rental market in Europe has undergone significant transformation in recent years, driven by changes in tenant needs and regulations that each country has implemented to manage the growth of digital platforms and new forms of occupancy. It’s important to understand that not all types of rentals are regulated in the same way, since the purpose, duration, and tenant profile define different legal and tax frameworks.

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Broadly speaking, we can differentiate three main types of rentals: traditional rentals, temporary rentals, and tourist rentals. Each of them is subject to specific regulations that affect both landlords and tenants, including contract duration, legal protection, applicable taxes, and required licenses. In this blog, we’ll explore the key differences between each type of rental and the main regulations that govern them across Europe.

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Traditional rental

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Traditional rental refers to long-term lease agreements where the tenant establishes their permanent residence. This type of contract is designed to provide stability for both the landlord and the tenant and is regulated by urban lease laws in each country.

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Key Features:

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• Duration: contracts usually have a minimum duration of between 1 and 3 years, depending on national legislation.
• Tenant protection: European regulations tend to protect tenants by allowing automatic contract renewals, limiting rent increases, and providing rights in the event of eviction.
• Rent control: in some countries, such as Germany and France, there are limits to prevent excessive increases in rental prices.
• Security deposit: a deposit equivalent to one or two months' rent is typically required, which is returned at the end of the contract if no damage is found in the property.
• Taxation: income from traditional rentals is subject to income tax, although some countries offer tax deductions to encourage long-term rentals.

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Example of specific regulation:

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• In Spain, the Urban Lease Law (LAU) regulates traditional rental contracts, establishing a minimum duration of 5 years (7 if the landlord is a company) and allowing for automatic annual renewals.

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Temporary rental

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Temporary rental is designed to meet the needs of people who require housing for a limited period but do not intend to establish a permanent residence. This type of rental sits in an intermediate category between traditional and tourist rentals, and its regulation varies significantly between countries.

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Key Features:

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• Duration: usually between 1 month and 11 months.
• Purpose: often linked to work, academic, or medical reasons.
• Legal protection: tenant protection is lower than in traditional rentals, as it’s considered a temporary occupation.
• Contract: a specific seasonal lease agreement is signed, which must justify the reason for the temporary nature of the rental.
• Taxation: in many countries, temporary rentals are subject to similar taxes as traditional rentals but without the tax benefits of a primary residence.
• License: a specific license is not usually required, but some countries require the contract to be registered with the authorities.

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Example of specific regulation:

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• In Italy, temporary rentals are regulated by the “contratto transitorio”, which allows contracts between 1 and 18 months, as long as the temporary nature of the rental is clearly stated in the contract.

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Tourist rental

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Tourist rental refers to the rental of a property for short-term stays, generally lasting a few days or weeks. Due to the impact of this type of rental on housing availability and the real estate market, European governments have introduced specific regulations to control its expansion.

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Key Features:

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• Duration: usually less than 30 days.
• License: most countries and cities require a specific license to rent a property for tourism purposes.
• Taxation: tourist rentals are subject to income tax, and in some cases, tourist or municipal taxes.
• Registration and control: many city councils require the property to be registered and impose limits on the number of days it can be rented per year.
• Tenant protection: tenant rights are very limited, as tourist rentals are not considered permanent residences.
• Additional requirements: some cities impose additional requirements such as installing smoke detectors, providing emergency exits, or complying with specific community rules.

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Example of specific regulation:

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• In France, tourist rentals are regulated by the Tourism Code, which requires the property to be registered with the city council and limits the number of days it can be rented per year to 120 days.

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The differences between traditional, temporary, and tourist rentals in Europe reflect the varying needs of property owners and tenants, as well as their impact on the real estate market and individual cities.

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While traditional rentals provide greater protection for tenants and offer long-term stability, temporary and tourist rentals are more focused on short-term and specific needs. Today, the trend in Europe is moving toward stricter regulation of tourist rentals to protect the residential market, while temporary and traditional rentals remain key options for both national and international mobility, as well as for maintaining stability in the real estate market.

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