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Free Online ConsultationSwitching Between Monthly and Short-Term Stays at Your Vacation Rental? Know the Law First—Or Risk Having Your License Revoked
Switching between monthly rentals and short-term stays at the same property has become a popular strategy for hosts looking to stabilize income while maximizing revenue during peak travel seasons. But this kind of hybrid operation comes with some serious legal considerations. Depending on how many days a guest stays and what type of contract is in place, your property may fall under the Private Lodging Business Act (Minpaku Act), the Hotel Business Act, or the Act on Land and Building Leases—and which law applies can determine whether your operation is even allowed to continue. Hosts who don’t fully understand how vacation rentals, monthly stays, switching between the two, and the law intersect can end up facing administrative guidance or worse from local authorities.
What Legally Separates a Short-Term Stay from a Monthly Rental?
Short-term stays fall under either the Private Lodging Business Act or the Hotel Business Act. Under the Private Lodging Business Act, there’s a hard cap of 180 days per year that a property can be offered for short-term stays (Articles 3 and 7)—exceed that, and you’re operating illegally. If you hold a simple lodging license under the Hotel Business Act instead, that day limit doesn’t apply, but you may need separate fire safety equipment under the Fire Service Act and a change-of-use approval under local building codes.
Monthly stays, on the other hand—generally defined as 30 days or longer—typically take the legal form of a “lease agreement” or “loan for use,” which can bring the Act on Land and Building Leases into play. Once a lease is established, the tenant gains legal protections under that act, meaning that even if you, the owner, want to switch the unit back to short-term use the following month, you generally can’t force the tenant out without “justifiable grounds” under the law. A surprising number of owners overlook this and assume they can freely flip a property between long-term, short-term, and long-term use as they please.
The 30-Day Threshold: Where “Lodging” Ends and “Leasing” Begins
Under the Hotel Business Act, “lodging” is defined as “a business that provides facilities and lets people stay overnight for a fee,” with continuity and actual residency being key factors in how authorities interpret a given situation. Interpretations vary somewhat by municipality, but generally speaking, stays under 30 days fall under the jurisdiction of the Hotel Business Act or the Private Lodging Business Act, while stays of 30 days or more tend to lean toward being classified as a lease. That said, the day count alone isn’t the deciding factor—contract wording, whether the guest brought in their own furniture or belongings, and the overall pattern of actual residence all factor into the determination.
Conditions for Using a Fixed-Term Lease Agreement
If you want to offer monthly stays while avoiding the protections of the Act on Land and Building Leases—and ensure you can reliably get tenants out and switch the property back to short-term use—entering into a “fixed-term building lease agreement” under Article 38 of the Act on Land and Building Leases is an effective solution. Under this type of contract, the lease simply ends when the term expires, with no automatic renewal, making it much easier to plan a switch back to short-term stays ahead of your next peak season. That said, for a fixed-term lease to be legally valid, you must provide a written explanation in advance and issue a separate contract document (Article 38, Paragraphs 2 and 3)—skip either step, and the agreement risks being treated as an ordinary lease instead.
A Real Switching Dispute We Encountered in the Field
Here at Stay Buddy, we once took over management of a property where this exact issue played out. The previous owner had been hosting guests on 2-3 month stays, but the only paperwork in place was a simple memorandum. When we tried to switch the unit over to short-term use, the tenant insisted they had the right to keep living there. Although the memorandum did specify a term, it didn’t meet the legal requirements for a fixed-term lease—no proper written explanation, no formal contract—so we ended up needing a lawyer to negotiate the move-out. It took about three months to get the tenant out, and the lost revenue during that period was significant. This case drove home just how much a single piece of paperwork can determine your freedom to operate.
How Switching Between Rental Types Affects Your Bottom Line
Monthly stays and short-term stays have fundamentally different revenue structures. Depending on location, season, and the booking platforms you use, short-term stays can often out-earn monthly rent once occupancy reaches somewhere in the 60-80% range. But variable costs also climb—cleaning fees, OTA commissions (typically in the 15-20% range, though this varies by contract terms), and consumable supplies all add up.
Monthly rentals, by contrast, tend to generate more predictable income with lower management overhead, which often translates to a more stable net profit margin. A hybrid strategy—monthly stays during the quiet off-season to avoid vacancy risk, switching to short-term stays during peak demand—can work well. But you need to factor in the lead time required for each switch (cleaning, restoring the unit to its original condition, checking furnishings, relisting on platforms, etc.), which often eats into your usable rental period more than initial plans account for. In our experience, you need to budget at least 3-5 days for the transition itself, or you risk fielding guest complaints from day one.
Updating Your Registration or License When Switching Rental Types
If a property registered under the Private Lodging Business Act is also being used for monthly stays, you need to be careful about how you count “days provided for lodging.” Since the law caps short-term use at 180 days per year, you need to keep your day-count records consistent with what you report to your local municipality. Days spent in monthly-rental mode don’t count toward that 180-day limit, but you’ll need to keep contracts on file and clearly document the rental period to prove it.
Likewise, if your property holds a simple lodging license under the Hotel Business Act and you’re also offering monthly stays, you need to make sure the nature of each contract is clearly defined so you don’t end up using the license outside its intended scope. If it later appears that the property was “actually functioning as a rental” despite holding a lodging license, it could raise questions about your operating track record. Checking in advance with your local vacation rental affairs desk or building guidance division can save you a lot of administrative headaches down the road.
For Help with Vacation Rental or Monthly Rental Operations, Talk to Stay Buddy
Stay Buddy Inc. offers end-to-end support for vacation rental and lodging operations—from helping with Private Lodging Business Act registration and Hotel Business Act licensing, to designing the right contracts for monthly rental arrangements. The legal risks of switching rental types and the revenue optimization strategies covered in this article will look different depending on your property’s location, structure, and your goals as an owner.
Whether you’re wondering “Is monthly or short-term better suited to my property?”, want to rebuild your fixed-term lease framework from scratch, or just want a legal check-up on your current operation, we offer a free initial consultation. Our team brings hands-on field experience, so you’ll get advice grounded in your property’s actual situation—not generic guidelines.
Feel free to reach out anytime through our contact form or by phone. We’re happy to help whether your property is already up and running or still in the planning stages.
