Long Term Rental

Renting your property long-term in Spain

30th May 2023 by c2cadmin

The Costa del Sol’s long-term rental market thrives right now. Demand surges for these properties. At C2C Properties, we keep a waiting list of eager tenants. Supply remains low, this drives prices higher.

Long-term rentals provide an attractive way to earn income from your Spanish property. Many owners still choose holiday rentals for income. Weekly rates do exceed long-term ones, yet, peak season ends quickly.

Competition grows fierce. You may not cover mortgage payments reliably. You might miss income goals. Consider marketing costs too. Add management and cleaning expenses after each stay. Holiday rentals follow strict rules. We recommend long-term rentals as a strong option.

To give you the low-down on long-term rentals on the Costa del Sol, we spoke to our long-term rental specialists in Manilva and asked them your questions.

Key Differences in Regulations

Long-term rentals avoid the restrictions on holiday properties.

Authorities introduced a rental law in 2016. This law regulates holiday rentals strictly. Owners must register properties and first occupation licenses. They do this with the Andalucia Tourist Board before renting out.

Owners follow local authority standards. These ensure guest comfort and safety.

Rule changes came in 2017. Owners now log guest arrivals at the local police station. They present passport copies.

Further updates arrived in 2019. These boost transparency. They confirm owners pay taxes. Property portals and estate agencies share client tax details. They send them to Spanish Tax Authorities. This stops tax evasion on income.

Long-term rentals have no such rules. Tell your Gestor about the rental. Declare your income this way. Pay taxes on it. Update your home insurance policy. Cover renters properly.

Hold title deeds to prove ownership. Gather utility bills. Get a first occupation certificate for habitability. Obtain an Energy Efficiency Certificate too.

Set everything up. Then rent out quickly. Our waiting list helps find tenants fast on the Costa del Sol.

What are the costs of renting out your property long term?

Landlords pay a finder’s fee to the agents that find them their tenant. Most people, especially those who do not live in Spain, will also contract a property management company to handle everything for them. Although this is an additional cost, you can rest assured that rent is being collected and maintenance issues are being resolved, without you having to try and organise things from overseas. Please contact us to find out about our property management services.

How much money could I earn for renting out my property long-term?

Obviously, this varies depending on the property and the area. In general, prices are rising due to the high demand and limited supply.

As an example, if you had an average 2-bedroom apartment in Duquesa Port you could expect €700-€900 euros per month. Further out from the centre the prices go down slightly to around €650-€800. The same property in Sabinillas would tend to go for €600-€700 and in Manilva village €550-€650. Townhouses or villas will obviously fetch significantly more.

It is important to note that once you have set the rent you are restricted on how much you can increase it. Due to the pandemic and cost of living crisis, restrictions have been put in place to only allow you to increase rent by 2% this year, 3% in 2024 and index linked from 2024.

Please contact us with your property details and location and we can give you a suggested price.

Can anyone rent out their property long-term?

Absolutely! However, it is particularly suitable for owners who live abroad, or have a second home in Spain and do not use the property on a regular basis. If the property is mortgage-free it’s ideal, as you have no concerns about interest rates rising and you can enjoy the regular payments to cover the cost of your community fees and council tax and make a tidy profit.

How much tax will I pay for renting out my property in Spain?

You do have to pay tax on your rental income.

Under Spanish tax law, long-term rentals of properties both in Spain and abroad are eligible for a tax allowance of 60% of the net rental income, and a mortgage tax allowance can also be claimed.

If you are not resident in Spain, but are an EU resident you have to pay foreign tax, known as IRNR (Impuesto sobre la Renta de No Residentes). In this case there are deductions for expenses related to the property.

If you are not resident in Spain and live outside the EU, you will be taxed on the full income you receive from rentals, without any deductions or allowances.

Speak to a Gestor or Accountant to find out exactly how much you would pay.

What does the landlord have to pay in terms of costs and what does the tenant cover?

The landlord pays the community fees and the IBI (Council tax) and any maintenance costs. When setting your rental rate, you need to budget for these expenses.

The tenant pays the utility bills and changes the bills into their name. They are responsible to pay for their electric, gas, water and internet/phone and should take insurance out for personal items.

How does the deposit work?

The tenant must pay one month deposit prior to moving in. This security deposit is then lodged with the regional public administration in an escrow account, therefore protected. It is not uncommon for landlords to then ask for additional guarantees in the form of further months deposits, to protect against non-payment.

Some insurance policies offer additional compensation for non-payment of rent, so this is worth looking into if you are concerned.

What level of demand do you have for long-term rental properties?

We have a very high demand and a shortage of properties and in fact have a waiting list of tenants desperate to find a property. All apartments, townhouses and villas are in demand, so it’s a great way to generate income on your property if you don’t use it very often.

Who can help me to rent my property long-term?

We can!

C2C Properties offer long-term rental properties across the Costa del Sol and have a waiting list of clients looking for properties. We have helped many clients to buy an investment property and then rent it out long-term and we also offer property management services to make renting out your property even easier. Contact us to discuss renting out your property long-term.