Long term rentals on the holiday isles of the Balearics generate more income for property investors than holiday lets, according to a new study.
The discovery was revealed after a long-term argument raging on the Spanish Balearic Islands.
Politicians on the islands claimed landlords offering holiday lets were swallowing up affordable properties, which led to higher prices and a shortage of homes for locals because they were driven by greed and the profits from letting to tourists.
Two economics professors from the University of the Balearics led a study to find the truth.
They found the greedy rental profits argument was a myth.
How rents vary
Their data showed the average holiday let was for 58 days a year and generated an income of 4,744 euros (395 euros a month).
Separate data from expat website Numbeo suggests the average rent for a 3-bedroom city centre flat in Palma pays 10,200 euros a year.
The study did explain that rents vary according to location and type of property.
Other factors also decide how a property is rented out.
Location may mean the property is not convenient for locals to travel to work or the owner may spend part of the year there as a second home, says the research.
The researchers still found some questions were unanswered.
“If long term lets are more profitable than those to tourists, why don’t residents find their rents nd property prices have soared in places like Palma and Eivissa?” said the report.
“Besides holiday lets are illegal in apartment blocks shared with families, so there should be more availability for locals. Perhaps some are rented out illegally.
“Our conclusion is rents are driven by surviving the economy and not investment in tourist properties.”
The local government does not disagree with the report and claims that offering accommodation to tourists is driving up housing costs.
“Tourist rentals have a repercussion on the cost of flats,” said a spokesman.
The authority is trying to curb investing in holiday lets by issuing licences, banning them in some cities and forcing tourists to pay a two-month rental deposit for stays as short as a week.