Is Short-Term Letting Still Worth It After Recent Changes?

Over the past decade, short-term letting has moved from a niche side-income to a core part of Gibraltar’s accommodation landscape.  Platforms like Airbnb, Booking.com and Vrbo have introduced a new class of host, and extended tourism stays beyond traditional hotels.  But recent legislative changes have reshaped the regulatory environment, prompting a question many landlords are now asking:

Is short-term letting still worth it - or is it time to reconsider your strategy?

In this article we unpack the realities, the opportunities, and the practical implications specific to Gibraltar’s market today.

1. A New Regulatory Framework: What’s Changed

In July 2025, Gibraltar implemented Part 2 of the Register of Property Occupation Act, introducing the first comprehensive regulatory framework for short-term rentals (STLs).  This wasn’t just a bureaucratic tick-box: it fundamentally changed how short-term lets must be managed.

Key requirements now include:

• Mandatory registration: All short-term lets must be registered before you advertise or offer them to guests.

• Deadline for existing STLs: Properties operating before the law came into force had to register by 30 September 2025.

• Reporting obligations: Hosts (or their agents) must submit regular returns on guest stays and income.  These returns are shared with the Income Tax Office, enhancing visibility and compliance.

• Light-touch regulation: The Government intended this to be a simple and transparent system - but it is regulation nonetheless.

This is not regulation for regulation’s sake.  Rather, it reflects a broader shift across Europe to balance short-term letting with consumer protection, competition fairness and proper taxation.  Gibraltar is not unlike other jurisdictions in this respect - but the specifics matter.

2. Why the Law Was Needed

Short-term letting in Gibraltar grew rapidly during and after the pandemic (mirroring global trends) but without an official register or clear rules, compliance and oversight suffered.  Hoteliers and tourism stakeholders raised legitimate concerns about unfair competition, inconsistent safety standards, and unreported income.

The new framework attempts to:

• Level the playing field between STL hosts and traditional accommodation providers.

• Improve safety and quality standards for guests.

• Ensure tax compliance, bringing more transparency to hosts’ rental income.

• Provide official data for planning and tourism strategy.

These objectives align with economic growth ambitions but they also create new administrative obligations for property owners.

3. So, Is It Still Worth It? The Financial Perspective

The answer isn’t a blanket yes or no.  It depends on your property type, location, and management approach.  But here’s what the economics look like in 2026:

Pros

Higher Per-Night Revenue vs Long-Term Leasing
In peak periods, especially during events, cruise arrivals or holiday seasons, short-term lets can command premium nightly rates compared to long-term rentals. The flexibility to price dynamically around local demand remains one of the biggest attractions.

Diversification of Income
For markets with seasonal variation, STLs deliver rental income even when long-term demand softens. This is particularly true for properties near Ocean Village, Europort, and historic districts, which appeal to both leisure and business travellers.

Tourism Demand Still Strong
Gibraltar’s tourism sector continues to diversify. While hotel stock is growing slowly, short-term lets help cater to overflow and niche markets; such as extended business stays or boutique traveller segments.

Cons

Administrative Burden
Regular reporting to the Registrar and the Income Tax Office is no longer optional. You must track guest details, length of stays, and revenue accurately, and agents are expected to handle this on your behalf if you appoint them.

Costs Can Erode Returns
Between marketing, cleaning, property maintenance and compliance, net yields can be thinner than they appear at first glance. Most professional hosts use an agent precisely because of this.

Regulatory Risk
While current rules are “light touch”, future enhancements (including inspections or fee revisions) could increase costs. Landlords must be prepared for this kind of regulatory evolution.

4. Key Factors for Landlords to Evaluate

When deciding whether short-term letting is still worthwhile, ask yourself:

✔ Location Matters

Properties closer to the waterfront, historic zones, and key tourism nodes generally perform better on short-term platforms.

✔ Costs vs Income

Compare net revenue after all costs (including Airbnb platform fees, cleaning, utilities, and agent management) against the security of long-term leasing.

✔ Your Appetite for Involvement

Do you want active management, or a hands-off investment?  If the latter, an experienced agent - one who understands registration, compliance and marketing - is almost essential.

✔ Compliance Confidence

If you struggle with reporting deadlines or tax reporting, the risk of non-compliance could outweigh the short-term gains.

5. Long-Term Trends: What’s Next for Gibraltar

Several broader trends matter:

• Tourism Growth Initiatives: Gibraltar’s push to grow tourism through infrastructure, events and improved connectivity will sustain demand for accommodation, including short-term options.

• Hotel Sector Expansion: As hotel inventory grows (new properties, brand renovations), competition for guest nights could increase.

• Regulatory Evolution: Authorities have signalled openness to further improvements in transparency and fairness, which may tighten the regime.

None of this suggests doom for short-term letting, but it does mean that being passive won’t cut it.  Today’s successful STLs are actively managed, fully compliant, and data-driven.

6. Where Short-Term Letting Still Shines

Despite the added compliance, short-term letting remains attractive for:

• Overseas owners who want flexible use of their property without locking into long-term leases.

• Properties in high-demand micro-locations, especially those with sea views, parking, or standout interiors.

• Landlords willing to use professional agents who can optimise pricing, ensure compliance and minimise void periods.

In short - yes, it’s still worth it for the right property and the right landlord.  But it’s not a hobby any more; it’s a regulated business with responsibilities.

7. Conclusion: Informed Decisions Win

If you’re considering short-term letting in Gibraltar in 2026:

• Understand the law, fully. Registration and reporting are mandatory.

• Be realistic about costs and returns. Gross revenue is only part of the picture.

• Choose expert support. A good agent (one who handles marketing and compliance) is more valuable than ever.

Short-term letting is still worth it, but only if approached professionally, strategically, and with your eyes open.

If you’d like personalised insight on whether your property specifically is a good fit for short-term letting - and how to navigate the registration and compliance process - drop us a line.  We're here to help you make the most of your Gibraltar investment.