Short term rentals, student protest becomes an excuse for a squeeze
The high rents in big cities become battle ground. On the one hand there are the students who protest, on the other the home owners. In particular those who have decided to rent their real estate properties only to tourists and for short periods. In between, local politics which, after years of neglecting the issue, are now thundering against short-term rentals, guilty of driving up rental prices. With the support of the hotel chain which speaks of unfair competition.
Meanwhile the holiday season has started, while the government is launching a new tourism plan to compete with Greece, Spain and France. And the Minister of Tourism Daniela Santanche promises to turn the page. The first step? Understand exactly the state of the art in short-term rentals given that while technology advanced, apps proliferated and sites conquered the market, politics has not yet managed to carry out a national census of houses rented out for short periods of time.
The law is clear
In 2020, the legislator established that the property owner can also rent the house for short periods (maximum 30 days). But he cannot manage more than four apartments in this way. In addition, it would be part of the business activity which is subject to different rules. For this reason, the apartment must be rented without additional services such as, for example, the breakfast that is normally offered in a B&B. This framework, if on the one hand it was necessary, on the other, however, had as a side effect theincrease in the degree of tax inconsistency in favor of real estate income.
The following year, the legislator then announced the creation of a national database of short-term rentals, excluding, again at a national level, a tourist tax for tenants and the registration of the contract with the Revenue Agency. Provided that the 30-day limit is respected, “even if not consecutive” as the tax authorities have clarified. The first stakes have been set.
The phenomenon is widespread in large cities
According to Rescasa’s analysis on AIRDNA sources (Airbnb and VRBO), last year in Milan there were just over 11 thousand ads for short-term rentals. In Rome 17 thousand, in Venice 6 thousand. 1.8 million nights were booked in Milan, almost 3.9 in Rome and just under 1.5 million in Venice. But the data does not exceed pre-Covid levels. And this even in spite of the fact that Milan is a highly sought-after city especially on the occasion of trade fairs that literally send prices skyrocketing. One example among many? The Salone del Mobile in Milan in whose days a hotel room can cost as much as 3,000 euros a night.
On the other hand, also as a result of events, the average rate per night has increased. In Milan and beyond. The cost for those who rent went from around 100 euros in 2019 to 132 wueo last year. Similar situation in Rome where there is a real drop in nights booked: from over 5 million bookings in 2019 to just under 3.9 million. Prices? Also increasing here. It went from 110 euros in 2019 to an average of 147 euros per day.
However, short-term rentals remain a niche
“Professionally managed apartment tourism has become a huge resource for the country. The work done by operators such as CleanBnB must be safeguarded, as well as the large investments and the hundreds of jobs generated in recent years” he explained Francesco Zorgno president of CleanBnB, a company listed on the Stock Exchange and the leading national operator in the management of short-term rental apartments, with over 1,800 properties managed in 70 different locations in the country. “If we look at professional managers, there is no real issue of competition with traditional rentalsas we operate on properties that would otherwise remain vacant and often degraded; nor of competition with the hotel offerwhich is profoundly different and offers services that apartments certainly cannot offer” he concluded.
And, in his vision, you can see it right away numbers at stake. “The apartment tourism sector has clearly shifted to professional tourism. This shift and general rise in the quality level of the apartment experience is also reflected in a gradual growth in the average rate,” she added. “However, tourism in apartments remains a very limited phenomenon. The number of active properties in cities such as Milan, for example, it represents just 5% of the total of second homes absolutely. It is clear that such small numbers can hardly have an influence on the price of long-term rentals, therefore definitely excluding that short-term rentals could impact on the expensive traditional rents” she concluded.
Contracts are standard, but fees vary by location
For short-term leases, the agreement must be stipulated between natural persons and, as anticipated, cannot exceed 30 days. For tax purposes, there are two options: the dry coupon (21% of the amount) or the ordinary taxation, which also depends on the income of the property owner. In this case, in fact, for taxation purposes, the fee is flat-rate reduced by 5% to take account of the expenses. The amount is then taxed at a rate that can vary from 23 to 43% depending on the total income.
However, the discount on Irpef rises to 35% for properties recognized as being of significant interest for historical, artistic, archaeological, cultural as foreseen in Legislative Decree 42/2004. For private rental only. Central Venice and the islands of Giudecca, Murano and Burano are a special case where the flat-rate reduction is 25 percent.
But there are different obligations at the local level
As often happens in Italy there are different provisions depending on the Region and also on the Municipality. There Puglia region it has decided, for example, that the owner can rent a maximum of three short-term apartments and four as required by law. But it’s there Veneto region to be the most aggressive on the subject of restrictions. The mayor of Venice Luigi Brugnaro has declared war on short-term rentals. Aim for a regulation which provides for the transition to professional activity if the property is rented for more than 120 days. He would like to do the same too the mayor of Milan, Giuseppe Sala.
Meanwhile, the Regions are collecting data. There Lombardy has provided for a form to communicate directly to the Municipality, through the One Stop Shop for Productive Activities (Suap), the accommodation offer for tourist purposes. And so he chose to do too Campania and Lazio, while the Tuscany Region c has gone further. He drew up a single text of the regional tourist system and established stringent rules not only for census of properties, but also monthly guests who are subject to tourist tax.
Finally from this year also the Sicily Region has planned a Regional Identification Code (CIR) of hospitality businesses and short-term rentals. In particular the managers, owners or legal representatives of newly established accommodation for tourist use (short-term rentals) are required to present a communication of the offer of hospitality to the competent territorial municipality and send an electronic copy to the tourist flow management system. Penalty for failure to communicate: a fine of 5 thousand euros.
And the returns aren’t all that high
According to an analysis by Scenari Immobiliari from the end of 2022, yields deriving from short-term rentals in the twelve most important Italian cities they hover around 4.5% versus 3.5% for student rentals. Obviously, maintenance interventions on the buildings are not included. In the background then there is the green theme which risks weighing heavily on home owners and consequently also on those who rent. Students and tourists alike.