The Costa del Sol continues to be one of Europe’s most attractive real estate markets for investors and homeowners seeking to generate passive income.
However, one of the most common questions landlords face is whether to rent their property for the long term or focus on the short-term vacation market.
In this comprehensive guide, we’ll explore every detail — from profitability and taxes to management and tenant stability —
so you can decide which strategy works best for your goals as a landlord in Spain.
1. Understanding the Difference Between Long-Term and Short-Term Rentals
Long-term rentals (LTR) typically last between 6 to 24 months, while short-term rentals (STR) — often known as holiday lets —
can range from just a few nights to a couple of months. The fundamental distinction lies in tenant turnover, rental yield,
and legal obligations.
LTRs appeal to landlords seeking stability and passive income. STRs appeal to those looking for higher gross returns and
flexibility to use the property themselves at certain times of the year.
2. Profitability Comparison – What Makes More Money?
Short-term rentals can often generate 30–50% more gross income annually than long-term rentals, especially in tourist-heavy areas
like Marbella or Fuengirola. However, this higher revenue often comes with significant costs: cleaning, booking commissions,
repairs, utilities, and taxes.
Long-term rentals provide lower gross income but much lower operating costs and management burden.
When adjusted for net income, the difference narrows considerably.
Example:
A 2-bedroom apartment in Fuengirola might earn €1,300/month on a long-term contract (€15,600/year).
The same property on Airbnb could gross €28,000/year — but after cleaning, utilities, platform fees, and tax,
the net might be closer to €16,000–€18,000.
That means, in reality, long-term rentals often deliver comparable or even superior net profitability with far less effort.
3. Time and Effort – How Involved Do You Want to Be?
The biggest advantage of long-term rentals is the “hands-off” experience.
Once a reliable tenant is found, landlords receive monthly income without the constant need to manage bookings,
check-ins, and maintenance requests.
Short-term rentals, by contrast, operate more like a hospitality business.
Owners need to handle frequent guest turnover, cleaning coordination, key exchanges,
and quick responses to messages — often within minutes to avoid bad reviews.
Unless you hire a dedicated management company (which charges 20–30% of revenue),
short-term rentals require significant time commitment.
4. Risk and Tenant Stability
Long-term tenants are generally more stable and predictable. Proper screening and contracts
protect landlords from unpaid rent or damages. In Spain, it’s also easier to claim tax benefits
on long-term leases.
Short-term tenants, while transient, reduce exposure to non-payment but increase wear and tear due
to higher turnover. Landlords also face the risk of seasonal demand fluctuation — earning much more
in summer but struggling in winter months.
5. Legal and Tax Considerations
Short-term rentals require a tourist license (VFT) issued by the Andalusian government,
and properties must meet strict standards: air conditioning, complaint forms, registration of every guest,
and compliance with data protection regulations.
Long-term rentals don’t require such licensing. They are governed by the *Ley de Arrendamientos Urbanos (LAU)*
which provides strong legal clarity for both parties. Taxes for long-term rentals are simpler, and
foreign owners can deduct expenses against rental income.
In most municipalities, the local tax rate and inspection requirements are more favorable for long-term leases.
6. When Long-Term Rentals Make More Sense
Long-term rentals are ideal for landlords who:
– Live abroad or don’t want daily involvement.
– Value consistent, predictable income.
– Prefer low operational costs and fewer legal obligations.
– Want tenants for 12–24 months or longer.
They are particularly suited for professionals, expats, and families relocating to the Costa del Sol.
7. When Short-Term Rentals Make More Sense
Short-term rentals can be a strong choice if:
– You live nearby or have a management team.
– Your property is in a high-tourism area (beachfront, old town, golf resort).
– You want to use the property part of the year.
– You’re comfortable operating it like a small business.
However, landlords should be aware that regulations are tightening,
especially regarding tourist license limits and community restrictions.
8. Combining Both Strategies – The Hybrid Model
Some landlords successfully blend both strategies:
they rent short-term during high season (June–September) and long-term for 6–8 months in winter.
This hybrid model maximizes yearly income while keeping occupancy stable.
However, it requires planning — different contracts, cleaning schedules, and marketing strategies.
It’s also important to check whether your property’s community rules allow both types of rentals.
9. The Future of Long-Term Rentals in Costa del Sol
The long-term rental market in Costa del Sol is booming. Demand from international digital nomads,
families, and professionals is at an all-time high. Rental prices have risen 20–30% since 2021,
while supply remains limited due to conversion of many homes into tourist apartments.
This imbalance creates a strong opportunity for landlords offering long-term rentals —
especially those managed professionally with proper tenant selection and maintenance.
10. Conclusion – Which Is Right for You?
Ultimately, the “best” choice depends on your goals.
If you prefer stability, simplicity, and passive income, long-term rentals are ideal.
If you seek higher gross yield and flexibility, short-term might work —
but only if you’re ready for more management and regulatory complexity.
At LongTermRent.es, we specialize in helping landlords secure reliable tenants
and achieve peace of mind. We handle everything — from marketing and screening to contracts,
maintenance, and rent collection.
Request your free property appraisal today →