Engel & Völkers Licence Partner Spain > Blog > Rent out a room or the whole property?

Rent out a room or the whole property?

Renting out a property is an alternative for those home owners who want to generate an income from their empty properties. There are different types of homes with great rental appeal, depending on factors, such as the term of the tenancy agreement (holiday lets, long term lets ...). Of course, there are several factors to consider before deciding on whether it's best to just rent out the rooms or the entire property. Each of these options poses both advantages and disadvantages. 

Advantages and Disadvantages of Renting Out Rooms

Renting out rooms allows the landlord to get a higher return on the property. This is because it is usual for the rental price of all the rooms to exceed the amount that would be acquired from the full rental of the property. 
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Room rental is also in high demand by tenants, such as students, especially for flats in university towns. For these tenants, it is much more convenient to rent a room than to try to gather a group of three or four students to rent the whole house with them. Of course, flexibility is the other positive factor. 

Yes, it is true that many landlords are reluctant to rent their homes to students due to the possible damages that can be done to their properties. There is also the practicality aspect, given the possible problems that can arise between tenants who have never shared a flat before. In terms of legal issues, it is worth noting that room letting is not tax-deductible, which can be detrimental for tenants. With regards to the financial aspect, if the rooms are empty, the property owner is likely to lose money. 

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Advantages and Disadvantages of Renting Out the Whole House

The main plus point for renting out the whole house is that the owner ensures an optimal return on their home, without having to rent out all the rooms. Property rental is also covered by the Urban Rental Law (LAU), which is not applicable in the case of room rental. It is always more practical for the owner to have a single tenancy agreement with two clearly defined parties. 

For purposes of habitability, it is equally evident that the expenses required to rent out the whole house is less than renting out rooms. This is because rooms do not have to be completely furnished (whereas all students need a desk in their bedroom, for example). On the other hand, the owners have the possibility of generating some of their income from the property's rent. 

It is worth bearing in mind that landlords can face bigger competition on the full property rental market. It also doesn't give them the option of renovating their home. Everything just be at the tenants' disposal.
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