In the last few years, short-term rentals have gained immense significance in India, providing property owners an excellent opportunity to earn more income than long-term leases. Digital platforms like OYO, Booking.com, and Airbnb have made it simpler for owners to take advantage of the rising demand from local and global travellers.
Thorough planning, strategic advertising, and offering an unparalleled guest experience are vital to making your property investment process lucrative. This blog post will take you through the short-term rental scenario in India and how one can make the most of it.
Understanding the Short-Term Rental Market in India
In India, the short-term rental market has evolved immensely in the last few years, backed by rising domestic tourism and the emergence of online tools like OYO, Airbnb and other players.
- Metro cities like Mumbai, Bengaluru and Delhi, along with other cities like Kerala, Rajasthan and Goa, have observed a high demand for short-term rentals since travellers seek customised and easy accommodation alternatives when compared to traditional hotels.
- The real estate market in India is diverse, providing a broad variety of residential and commercial options to cater to leisure travellers and working professionals.
- However, at times, this segment faces challenges in terms of competition, property handling issues and inconsistent regulation, along with assessing the evolving landscape of post-COVID-19 travel demands, wherein there has been an increase in the overall demand for long-term rentals and private stays.
The future of Indian real estate appears promising, with a continual rise in demand, technological enhancements and a growing trend toward sustainable and eco-friendly tourism.
Read Also: Analysing Rental Yields on Luxury Apartments in Major Indian Cities for NRIs
Benefits of Short-Term Rentals for NRIs
For NRIs, short-term rentals can provide a plethora of advantages that wish to reside or invest in India, which are given below:
- Cultural Attachment: For NRIs, renting out property can offer a flexible, fruitful and easy maintenance investment avenue while also providing a way to be connected to India.
- Access To Rising Tourism: According to the area, NRIs can reap the benefits of deductions or tax incentives regarding property rental income. Also, owning a property in India offers them a stake in its progressing real estate domain, providing long-term potential for capital growth.
- Ease of Handling: With the growing influence of online platforms like Airbnb, OYO and other domestic property management companies, it has become easy for NRIs to handle their short-term rentals remotely. These resources can serve to be a great tool for managing bookings, consumer service and payments, thus making it hassle-free for NRIs to reap income without having to be physically present in India.
- Customised Experiences for Friends and Family: For NRIs who visit India, short-term rentals such as villas and homestays offer an easy and comfortable space when compared to hotels. They enable them to arrange events for family and friends in an exclusive and homely setting, which makes them a great choice for extended family visits or large groups.
- High Investment Returns: NRIs can get lucrative rental income out of their properties, particularly in demanded areas or tourist spots. Short-term rentals can fetch better gains than long-term leases, mostly during peak travel times.
Also, short-term rentals in popular areas can generate 2-3 times the gross revenue of long-term rentals, leading to better cash flow in the right market.
Read Also: NRI Guide: Tax on Rental Income in India – Essential Tips and Insights
Legal and Regulatory Considerations for Short-Term Rentals
In India, the regulatory and legal landscape for short-term rentals is blooming, and there are various important considerations for hosts and homeowners:
- Tenant Laws: Though short-term rentals are not regulated by traditional laws, homeowners should remain alert to potential debts or liabilities pertaining to safety concerns, property damage, and so on to ensure that the guest stays within the pre-agreed duration and terms.
- Goods and Services Tax: Short-term rentals are subject to Goods and Services Tax, as homeowners are required to collect and remit tax on their rental income. This rule applies if the yearly income goes above a specific limit.
Hence, it is essential for hosts to stay informed of their respective tax liabilities and have relevant documents and records to ensure due diligence and compliance.
- Permits and Licensing: In a few areas, hosts might need to get their short-term rental properties registered or procure a license.
For example, some municipalities might need registration with the municipal corporation and the local tourism department. In case the host fails to do so, he may be needed to incur fines or the cessation of properties.
Therefore, staying on top of the changing legal requirements and consulting tax or legal advisors can help alleviate potential risks and ensure smooth and timely operations.
Tips for Maximising Rental Income
Enhancing rental income for short-term rentals needs a blend of smart pricing, efficient property handling, advertising and customer experience. Here are some productive tips to guide property owners to maximise their rental income:
- Upgrade Property Demand: You can invest in premium furnishings and amenities and consider other thoughtful details, such as good lighting and comfortable bedding, to make your property stand apart.
- Provide Exclusive Amenities: Offer extras such as speedy Wi-Fi, luxurious toiletries or guides to make your property even more attractive and enhance overall customer satisfaction.
- Be Communicative and Respond Promptly: It is important to be communicative to guest requests to create trust and reliability and enhance the probability of bookings.
- Enhance Occupancy: Fill vacant times by offering attractive discounts for extended stays or last-moment bookings, assuring a stable and steady rental income.
- Advertise on Multiple Platforms: You can list your short-term rental property on various rental websites and platforms like Booking.com and Airbnb to reach a wide set of audience and enhance visibility.
- Premium Quality Images and Listings: Utilise professional photos and draft a catchy listing deal that showcases the unique aspects of your property to lure an increased number of bookings.
Conclusion
Making your property investment profitable with short-term rentals requires effort, creativity, and business expertise. By adopting a well-rounded approach and a seamless process, you can maximise your returns. As India’s short-term rental market continues to grow, those who adapt to emerging trends and offer exceptional guest experiences will thrive and benefit from this evolving sector.
Explore the concept of short-term rentals with Rustomjee, your go-to place for investing in premium residential properties. Make the right choice for you and your loved ones.
FAQs
- Are there any legal restrictions on short-term rentals in India?
Yes. Short-term rentals in India tend to come with certain legal restrictions that can differ from one city to another. Some cities, such as Bangalore and Delhi, require homeowners to register with local bodies, whereas other cities tend to impose limitations on the duration for which a property can be rented for the short term.
- How do I manage a short-term rental property remotely as an NRI?
You can manage a short-term rental property remotely as an NRI by consulting a property manager or local caretaker to manage daily tasks. Also, utilising property management tools and resources can assist you in keeping track of the bookings and facilitate smooth guest communications while ensuring hassle-free operations.
- What are the tax implications of earning rental income in India?
The tax implications that one needs to be aware of when earning rental income in India are related to home loan interest and property maintenance. There is a 30% tax rate on the income post deductions and NRIs are needed to file tax returns and might be needed to pay TDS in India on the rental income, as per their residential status.
