The long-term rental market on the Costa del Sol is hot right now. There is huge demand for long-term rental properties and at C2C Properties we have a waiting list of tenants searching for a property. Lack of supply and lots of demand means that prices are being pushed up and long-term rental is a very attractive opportunity if you want to generate income from your Spanish property.

However, many owners are still fixed on holiday rentals as the best way to generate income. True, the weekly income is greater, but because the peak season is relatively short and competition is high, it’s not a sure bet if you need to meet mortgage payments or want to generate a certain amount of income. Add to that the costs of marketing, managing and cleaning the property after every visit and the tight regulation on holiday rentals and we would recommend strongly considering long-term rental as an 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.

What are the differences between holiday rentals and long-term rentals in terms of regulation?

Long-term rentals are not subject to any of the restrictions that face holiday rental properties.

The rental law that was brought in during 2016 highly regulated the holiday rental industry and required that owners register their properties along with the first occupation license with the Andalucia Tourist Board before it can be rented out.

You also need to comply with certain standards set by the local authority to ensure the comfort and safety of guests.

Modifications to the rules in 2017 added that you must also log arrivals of guests with your local police station and present copies of their passports. Further modifications in 2019 to make the industry more transparent, and ensure owners are paying tax, is that property portals and estate agencies doing rentals are obliged to pass their clients’ tax details over to the Spanish Tax Authorities. This has removed the opportunity to avoid paying tax on this income.

By contrast, long-term rentals have no restrictions or requirements. You simply have to advise your Gestor that you will be renting out the property, in order to ensure you declare the income and are taxed on that income. You must also make changes to your home insurance policy to ensure that you are covered for other people renting the property.

You will need to be in possession of the title deeds to certify that the house you are renting belongs to you. Utility bills, a certificate of first occupation to show that it is habitable and an Energy Efficiency Certificate are also required.

Once you’ve got all of those things in place, you’re ready to rent and because we have a waiting list of tenants searching for long-term rental properties on the Costa del Sol, you could get someone in pretty much straight away.

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 2025.

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.