Long-Term Rental Income in Spain: What Investors Need to Know
Long-term rentals in Spain offer steady, predictable income with less management overhead than holiday lets. But the Spanish rental market comes with strong tenant protections that every landlord must understand before signing a contract.
Typical Yields for Long-Term Rentals
Gross yields for long-term rentals range from 4% to 6.5% across Spain. The Costa del Sol delivers 4.5% to 6% depending on location and property type. Inland cities like Granada and Seville can reach 5.5% to 7% due to lower purchase prices and strong local demand.
A two-bedroom apartment in Fuengirola purchased for EUR 180,000 can rent for EUR 800 to EUR 950 per month on a long-term contract. That translates to roughly 5.3% to 6.3% gross yield. After expenses (community fees, IBI tax, insurance, maintenance), net yields settle around 3.5% to 4.5%.
The LAU: Spain's Tenancy Law
The Ley de Arrendamientos Urbanos (LAU) heavily favours tenants. Key provisions you must know:
- Minimum contract duration is 5 years for individual landlords, 7 years for corporate landlords
- Tenants can leave after 6 months with 30 days notice
- Annual rent increases are capped (linked to the INE reference index since 2024)
- Eviction for non-payment takes 6 to 12 months through the courts
- The landlord must pay for structural repairs; the tenant covers minor maintenance
Setting Up the Contract
A proper rental contract (contrato de arrendamiento) should include:
- Full identification of both parties (NIE/DNI, address)
- Property description and cadastral reference
- Monthly rent amount and payment method
- Deposit amount (by law, one month's rent for residential, held with the regional deposit authority)
- Duration and renewal terms
- Inventory of furnishings if applicable
- Responsibility split for expenses (community fees, utilities, IBI)
Deposit Rules
The legal deposit (fianza) is exactly one month's rent. This must be lodged with your autonomous community's deposit authority (in Andalusia, this is AVRA). You can also request additional guarantees of up to two months' rent. Keep the deposit registration receipt as proof of compliance.
Tax Treatment
Resident landlords declare rental income on their annual IRPF return and can deduct most property-related expenses. A 60% reduction on net rental income applies when the property is the tenant's primary residence. Non-residents pay a flat 19% (EU/EEA) or 24% tax on net income, declared quarterly via modelo 210.
Use our free calculator to estimate your total costs including tax obligations on your long-term rental income.
Tenant Selection
Screening tenants properly is your best protection against non-payment. Request proof of income (payslips or tax returns), employment contract, previous landlord references, and a credit report. Many landlords also require a bank guarantee or additional deposit beyond the legal minimum.
Long-Term vs Short-Term: Making the Choice
Long-term rentals produce lower gross income but offer stability, fewer turnovers, and minimal management effort. Short-term lets yield more in high season but come with higher costs, seasonal vacancies, and regulatory complexity. For many investors, a mix of both strategies across a portfolio delivers the best risk-adjusted returns.