Constant AirBnB Complaining by Landlords
As a traveler exploring the Spain through Airbnb, I have heard from numerous hosts expressing their frustrations with the platform. They complain about the hefty AirBnB fees when they successfully rent out their properties. These fees, ranging from 3% to 5%, seem to take a significant chunk out of their earnings, leaving them dissatisfied with the overall experience.
During conversations with hosts, they also mentioned the obstacles they create themselves when trying to rent out vacant apartments and houses.
The Burden of Service Fees
When landlords opt to enlist their properties on home-sharing platforms, they are typically required to pay a service fee, which is a percentage of the rental income. This fee can range anywhere from 3% to 5% or even exceed that rate, often varying based on the platform and the property’s location.
Reduced Profits
The money deducted as a service fee is money that could have otherwise been reinvested in property maintenance, improvements, or saved for other investments.
Self-Imposed Obstacles: How Landlords Work Against Themselves
During conversations with hosts, they point out the obstacles they themselves create when trying to rent out vacant apartments and houses. From complicated paperwork, non-payment insurance, bank guarantees, multiple month security deposits, etc and they feel overwhelmed by the complexities they themselves ultimately create.
Surprisingly, some of these obstacles are not imposed by external factors but rather by landlords themselves. Three notable examples of these self-imposed hurdles are Aval Bancario, Non-Payment Insurance, and Real Estate Agent Fees .
Aval Bancario (Bank Guarantee)
Understanding Aval Bancario (Bank Guarantee)
An Aval Bancario is a legal document issued by a financial institution, such as a bank, on behalf of a tenant to guarantee the fulfillment of their rental obligations. In simpler terms, it serves as a promise that the bank will cover the rental costs if the tenant fails to do so. This requirement is common in the rental market, and while it provides a sense of security to landlords, it can drive away potential rent payers i.e. tenants.
Financial Barriers for Renters
Imagine you want to rent a place for $1,000 a month. Consider that in order to move in, besides the usual rent and a security deposit, you might have to pay an extra one-time fee. This extra money could be anywhere from $1,000 to $3,000.
For individuals or families already struggling to make ends meet, these upfront costs can be an insurmountable burden and again push away potential rent payers i.e. tenants.
Non Payment Insurance
Non-Payment Insurance Explained
Non-Payment Insurance, also known as Rent Default Insurance, is an arrangement between a landlord and an insurance company. While the idea behind it seems reasonable, the implementation and cost of this insurance often lead to troubling outcomes for tenants.
The Financial Strain on Renters
Non-Payment Insurance can drive away potential tenants due to the added financial burden. With tight budgets, renters may be deterred by the extra expense, pushing their limits.
Inaccessible to Most Renters
Non-Payment Insurance is often priced beyond the reach of the average renter. For those with less-than-perfect credit or a history of financial struggles, obtaining this insurance can be extremely challenging or prohibitively expensive.
Massive Fees Passed Onto Tenants
In some cases, landlords not only expect tenants to pay for the insurance premium, but they may also impose additional fees for facilitating the process. Tenants might feel trapped into accepting these fees, as refusing to do so could jeopardize their chances of securing the rental property.
Absence of Benefits for Renters
Unlike other types of insurance that protect policyholders in times of crisis, Non-Payment Insurance solely benefits landlords by providing them with a safety net in case of rental defaults. Tenants, on the other hand, do not receive any benefits from this insurance, despite being the ones who are having to pay the premiums.
Ultimately an Absolute Income Blocker
In simple terms, non-payment insurance might not be the best choice for landlords. It can lead to losing tenants because the insurance company’s goals might not align with theirs. For landlords, the main aim is to receive rent payments on time, but the insurance company may not act quickly when it’s needed the most.
Non-payment insurance comes with a waiting period and a deductible. This means landlords might think they are covered, but they’ll still face delays and extra costs before receiving any help. It’s essential for landlords to carefully weigh their options and find solutions that truly support their prime objective – getting paid rent and avoiding a vacant property.
Real Estate Agent Fees (Honorários de Imobiliárias)
The Landlord’s Convenience
Real estate agents are often hired by landlords because they are too lazy or don’t have the time to show the property themselves. While this might be convenient for the landlord, it can lead to an unfair distribution of expenses in the rental process. The agent works on behalf of the landlord and showcases the property to numerous potential tenants, but the cost of this effort is eventually borne by the final tenant who decides to rent the property.
The Burden on Tenants
Consider this scenario: a real estate agent shows the property to 50 potential renters, and none of them pays for the service. The 51st person, who eventually becomes the tenant, is the one expected to cover the cost for showing the property to the previous 50 individuals. The tenant may not have the slightest clue that they are paying for a service rendered to others.
Lack of Transparency
Potential tenants may not be informed upfront about the costs they will have to bear for the property showing. Many tenants might assume that the agent’s fee is covered by the landlord or built into the rental price, but discovering the additional expenses only after deciding to rent the property can be a shock.
Inflated Costs
As tenants are the ones covering the costs of showing the property, there is a risk of agents inflating the expenses to maximize their income. Since the tenants are not directly involved in hiring the agent, they have little control over the fees, and this can lead to agents taking advantage of the situation, charging more than what might be considered reasonable.
It’s Now Not Legal to Charge Tenants!!
According to the La Nueva Ley de Vivienda, the expenses and fees related to renting a property will now always be paid by the owner. This means that the owner must cover the costs of real estate services provided for their property. This rule used to apply only to big landlords, but now it applies to all property owners.
How Can Landlords Thrive and Maximize Rental Income
Re-access Outdated Practices
Landlords must critically reassess their current practices to avoid significant financial losses. Relying on outdated bank guarantees, demanding multiple months of security deposits, and insisting on non-payment insurance may initially provide a sense of security, but the long-term impact on their profits demands serious consideration. In reality, these measures often lead to substantial financial setbacks, resulting in the loss of tens of thousands of euros due to extended periods of property vacancies.
Think Like it’s the 21st Century
Embracing more tenant-friendly rental guarantee options that do not burden potential renters with exorbitant fees can attract a larger pool of qualified tenants.
Tenants – Just Walk Away – Move On!
If you find rental properties in Spain that ask for bank guarantees, Non Payment Insurance applications/fees, or tenant paid Real Estate agent fees, just to WALK AWAY and look for better options.
Protect yourself by saying NO to these practices. There are other properties without these extra costs. Your financial security and peace of mind are important, so always put them first.
In Closing
The constant complaining by landlords about the fees at Airbnb seems ironic when they themselves impose numerous obstacles that hinder their own financial stability and the rental experience for tenants.
Unfortunately, landlords also contribute to their own problems by implementing self-imposed hurdles such as Aval Bancario (Bank Guarantee), Non-Payment Insurance, and Real Estate Agent Fees.
In summary, while landlords express frustration over fees at Airbnb, they should also take a critical look at their own practices and policies that negatively impact themselves.
