Long‑Term vs Short‑Term Letting Abroad: Which Is More Profitable for Irish Investors?
Introduction
Irish expats and investors are increasingly looking beyond the Emerald Isle for property opportunities. The big question is whether to rent a property long‑term (12‑month leases) or short‑term (Airbnb, holiday lets) to maximise profit.
Both strategies can be lucrative, but they differ in cash flow, risk, management effort, taxation and regulatory climate. This article breaks down the numbers for the most popular European destinations, highlights hidden costs, and gives practical advice so you can decide which model best fits your financial goals and lifestyle.
1. How Profitability Is Measured
| Metric | What It Shows | Typical Source |
|---|---|---|
| Gross Rental Yield | Annual rent ÷ purchase price (ignores expenses) | Long‑term market reports (Global Property Guide, Savills) |
| Net Rental Yield | Gross yield minus running costs (management, maintenance, taxes) | Investor calculators, property‑manager quotes |
| Average Daily Rate (ADR) | Average nightly price for a short‑term let | Airbtics, AirDNA (2024‑25 data) |
| Occupancy Rate | % of nights booked per year | Airbtics, local tourism boards |
| Short‑Term Net Yield | (ADR × Occupancy × 365 – expenses) ÷ purchase price | Calculated from ADR & occupancy data |
Using the same property price across both models lets us compare apples‑to‑apples.
2. Yield Benchmarks – Long‑Term vs Short‑Term (2024‑25)
| City (Country) | Long‑Term Gross Yield* | Short‑Term Net Yield† (average) | ADR (€/night) | Occupancy |
|---|---|---|---|---|
| Dublin (Ireland) | 7.76 % | 5.9 % | €180‑€250 | 73 % |
| Lisbon (Portugal) | 5.65 % | 7.2 % | €115‑€180 | 80 % |
| Barcelona (Spain) | 5.3 % | 6.8 % | €110‑€160 | 78 % |
| Budapest (Hungary) | 6.1 % | 7.5 % | €85‑€130 | 82 % |
| Kraków (Poland) | 6.0 % | 6.2 % | €70‑€115 | 76 % |
| Tallinn (Estonia) | 6.4 % | 6.9 % | €90‑€140 | 79 % |
| Rome (Italy) | 4.9 % | 5.5 % | €120‑€190 | 71 % |
| Athens (Greece) | 5.2 % | 5.8 % | €85‑€130 | 75 % |
| Split (Croatia) | 5.5 % | 6.3 % | €95‑€150 | 77 % |
| Riga (Latvia) | 7.46 % | 6.5 % | €80‑€125 | 81 % |
* Gross yield – before expenses.
† Net yield – after typical short‑term costs (cleaning, platform fees, 20 % management).
Key take‑away: In most Southern and Central European cities, short‑term letting outperforms long‑term yields by 0.5‑2 percentage points. Dublin and Riga are exceptions where the long‑term yield remains higher because property prices are steep and short‑term regulation is tightening.
3. Revenue Drivers for Short‑Term Letting
- Tourism volume – Cities with > 10 m annual visitors (Lisbon, Barcelona, Budapest) enjoy higher ADR and occupancy.
- Digital‑nomad visas – Portugal’s D7 and Estonia’s e‑Residency attract remote workers who stay 30‑90 days, smoothing occupancy.
- Seasonality – Mediterranean hotspots peak June‑September (occupancy up to 90 %). Northern cities (Tallinn, Riga) have flatter curves but benefit from year‑round business travel.
- Platform choice – Airbnb takes ~3 % host‑fee, while Booking.com can charge 15‑20 % if you use a manager.
4. Cost Comparison
| Cost Item | Long‑Term Letting | Short‑Term Letting |
|---|---|---|
| Property management | 5‑10 % of rent (often tenant‑find only) | 20‑30 % of gross revenue (cleaning, guest‑communication) |
| Utilities | Usually tenant‑paid | Owner‑paid (electricity, water, internet) |
| Council tax / Local tax | Same for both | Same, but some cities levy a “tourist tax” per night (e.g., €0.50‑€2) |
| Insurance | Basic landlord policy (€150‑€250/yr) | Short‑term specific policy (€300‑€500/yr) |
| Furnishings | Minimal (often unfurnished) | Full furnishing & décor (€5‑€10k upfront) |
| Maintenance | 1‑2 % of property value/yr | Higher wear‑and‑tear; 2‑3 % of revenue/yr |
| Vacancy | 1‑3 % (typical 10‑12 weeks/yr) | 10‑15 % (10‑55 nights/yr) depending on season |
Result: Short‑term lets generate higher gross income but also higher variable costs. Net yield gaps shrink when you factor in professional management and furnishing depreciation.
5. Tax Implications for Irish Investors
| Jurisdiction | Tax on Rental Income | Irish Tax Credit/Relief |
|---|---|---|
| Ireland (if you remain tax resident) | Worldwide income taxed at marginal rate (20‑40 %). Foreign tax credit available for double taxation. | Credit up to foreign tax paid; can claim Foreign Tax Credit on Form 11. |
| Portugal | 28 % flat on rental profit (deductible expenses allowed). Non‑resident may elect 28 % or progressive rates. | Irish‑Portuguese Double Tax Treaty prevents double tax; credit for Portuguese tax paid. |
| Spain | 19‑24 % on net profit for non‑residents. 24 % on gross for short‑term if no expenses claimed. | Credit under treaty; need Spanish NIF. |
| Hungary | 15 % flat on net profit; expenses fully deductible. | Treaty credit applies. |
| Estonia | 20 % corporate tax on distributed profit; rental income taxed at 20 % if distributed. | Treaty credit; Estonia’s transparent system suits Irish investors. |
| Turkey | 15 % on net rental profit for non‑residents. | Treaty credit; note that short‑term “tourist” rentals may be taxed as business income (20 %). |
Practical tip:
- Register for a local tax number early.
- Keep detailed expense records (cleaning, platform fees, furnishings).
- Consider a Irish tax adviser experienced with the relevant double‑tax treaty to optimise credits and avoid surprise liabilities.
6. Regulatory Landscape – What Can Stop You?
| Country | Short‑Term Letting Restrictions | Long‑Term Restrictions |
|---|---|---|
| Ireland | No national ban, but local authorities may require planning permission for “holiday lets” in residential zones. | Standard tenancy law applies; 12‑month minimum in many localities. |
| Portugal | Lisbon caps 90 days/year for entire‑home Airbnb unless you have a “Lisbon Home Sharing Licence” (requires registration, safety checks). | No caps; tenant‑rights strong – 6‑month notice to quit. |
| Spain | Barcelona & Madrid require a “tourist licence”; illegal rentals face fines up to €30,000. | Tenancy law protects tenants; 5‑year contract typical. |
| Italy | Rome and Venice limit short‑term rentals to 30‑90 days per year; need a “casa vacanze” licence. | No special limits, but eviction process is lengthy. |
| Croatia | Split allows short‑term rentals but requires a “tourist accommodation” permit; 30 % tax on gross revenue. | No major restrictions. |
| Hungary | Budapest permits short‑term lets but requires registration with the municipality; fines for unregistered units. | Tenancy law straightforward. |
| Turkey | No national ban, but Istanbul imposes a “short‑term rental tax” (15 % on gross). | Standard lease law. |
Bottom line: Before buying, verify the city’s short‑term licensing requirements. In many capital cities, the administrative hurdle can erode the yield advantage.
7. Financing – Mortgage Costs Abroad
| Market | Typical Mortgage Rate (2024‑25) | Loan‑to‑Value (LTV) | Irish Investor Considerations |
|---|---|---|---|
| Ireland | 5.0‑5.8 % (fixed 2‑yr) | 70‑80 % | Familiar market; mortgage interest relief available for buy‑to‑let. |
| Portugal | 4.2‑5.1 % (variable) | 60‑70 % for non‑residents | Portuguese banks require Portuguese tax number; sometimes higher rates for short‑term rentals. |
| Spain | 4.5‑5.5 % (variable) | 60‑70 % | Spanish banks may demand Spanish income proof; higher rates for non‑EU residents. |
| Hungary | 3.8‑4.6 % (variable) | 60‑75 % | Low rates, but currency risk if loan in HUF. |
| Estonia | 3.5‑4.2 % (variable) | 70‑80 % | Attractive for EU investors; can be financed in EUR. |
| Turkey | 13‑15 % (high inflation) | 50‑60 % | Very high rates; only consider if purchase price is dramatically lower. |
Strategic tip:
- Lock in a fixed rate for at least 3‑5 years if you plan a long‑term hold.
- For short‑term lets, a variable rate may be acceptable if you expect strong cash flow to absorb rate swings.
8. Case Study – Dublin vs Lisbon (2025)
Assumptions
- Purchase price: €350,000 (Dublin), €300,000 (Lisbon) – typical for a two‑bedroom city‑centre flat.
- Financing: 70 % LTV, Irish investor, 5 % interest, 25‑year term.
- Management: 8 % of gross rent (long‑term), 25 % of gross revenue (short‑term).
- Occupancy: 73 % (Dublin) vs 80 % (Lisbon).
- ADR: €200 (Dublin) vs €150 (Lisbon).
Long‑Term Let (Dublin)
- Gross rent: €2,400 pcm → €28,800 yr.
- Net after management & expenses (≈12 %): €25,300.
- Net yield: 7.2 %.
- Mortgage payment (interest‑only for simplicity): €9,800 yr.
- Cash‑flow after mortgage: €15,500.
Short‑Term Let (Lisbon)
- Gross revenue: €150 × 365 × 0.80 = €43,800.
- Management & cleaning (25 %): €10,950.
- Taxes & tourist levy (≈15 % of gross): €6,570.
- Net after all costs: €26,280.
- Net yield: 8.8 %.
- Mortgage (interest‑only): €8,250 yr.
- Cash‑flow after mortgage: €18,030.
Result: Despite a lower purchase price and higher operating costs, the Lisbon short‑term model delivers a higher cash‑flow and net yield, illustrating why many Irish investors favour Mediterranean hotspots for holiday lets.
9. Practical Checklist – Choosing the Right Model
When Short‑Term Letting Makes Sense
- High tourism demand and ADR > €120.
- Clear, obtainable short‑term licence (Lisbon, Barcelona, Budapest).
- Ability to self‑manage or hire a reputable local manager.
- Currency stability (property priced in EUR, USD, or local currency with low inflation).
When Long‑Term Letting Is Safer
- Regulatory barriers to short‑term rentals (e.g., Dublin, Rome).
- Desire for hands‑off income – long‑term tenants need less day‑to‑day interaction.
- Limited furnishing budget; unfurnished units cost less to set up.
- Expectation of steady cash flow with lower vacancy risk.
Decision Flow
- Check local short‑term licence rules → If prohibited, go long‑term.
- Calculate expected net yield for both models (use ADR, occupancy, management %).
- Run a cash‑flow model including mortgage, taxes, insurance, furnishing depreciation.
- Assess personal time – can you handle guest turnover? If not, factor in manager fees.
- Consider exit strategy – long‑term properties often appreciate faster in high‑growth cities (Dublin, Warsaw).
10. Risk Management Tips for Irish Investors
| Risk | Mitigation |
|---|---|
| Regulatory crackdown | Keep licences up‑to‑date; diversify across at least two cities. |
| Seasonal vacancy | Use a hybrid model: rent long‑term during low season, short‑term in peak months (where permitted). |
| Currency fluctuation | Borrow in the same currency as the property (EUR for Portugal, Spain, etc.) or use a currency‑hedge product. |
| Management quality | Vet managers with references; use a performance‑based contract (e.g., 20 % of revenue plus a fixed fee). |
| Tax surprise | Engage a cross‑border tax adviser before purchase; file Irish tax returns on time to claim foreign tax credits. |
| Property damage | Require security deposits and use a short‑term insurance policy covering guest damage. |
Conclusion
Both long‑term and short‑term letting can be profitable abroad, but the optimal choice depends on location, regulation, and your personal capacity to manage the property.
- In tourist‑heavy markets with liberal short‑term rules (Lisbon, Barcelona, Budapest, Split), short‑term lets typically out‑perform long‑term yields by 0.5‑2 percentage points, delivering higher cash flow once management costs are accounted for.
- In high‑price, regulation‑tight cities (Dublin, Rome, Paris), long‑term rentals remain the safer bet, offering stable yields above 6 % with minimal day‑to‑day involvement.
For the Irish investor, the sweet spot often lies in Southern Europe where you can combine a solid short‑term net yield with a favourable tax treaty and a mortgage in euros. Always run the numbers, respect local licensing, and protect yourself with professional tax and legal advice.
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