Key Takeaways
- ✓ You must have a tourist licence (licencia turística) to legally rent short-term in the Valencia and Andalusia regions.
- ✓ EU residents pay 19% tax on net rental profit (after deductions); non-EU residents pay 24% on gross income.
- ✓ Seasonal demand peaks May–October, with the highest rates in July–August.
- ✓ Beach proximity, a pool and air conditioning are the three biggest demand drivers for holiday rentals.
- ✓ Professional property management typically costs 15–25% of gross rental income.
The Rental Market Overview
Spain’s coastal property rental market has two distinct segments, and understanding the difference is essential before you invest. Short-term holiday lets (rentals under 11 months, typically booked by the week) generate the highest per-night income but come with seasonal fluctuations, regulatory requirements and higher management costs. Long-term rentals (11+ months, usually to local workers or retirees) deliver lower but steady monthly income with minimal management overhead.
The holiday rental season on the Costa Blanca and Costa del Sol runs from May to October, with absolute peak demand during the six weeks from mid-July to late August. A well-located two-bedroom apartment near the beach can command €600–€1,200 per week in peak season, dropping to €350–€500 per week in the shoulder months. Outside season (November–March), occupancy for short-term lets drops significantly — many owners switch to medium-term winter lets (3–6 months) targeting northern European snowbirds at €500–€800 per month.
Long-term rentals are simpler. A two-bedroom apartment in Torrevieja rents for €500–€750 per month year-round. In Fuengirola, expect €700–€1,000 per month. Demand is steady, but the tenant protection laws in Spain are strongly pro-tenant, making eviction for non-payment a lengthy process. If you choose long-term letting, screen tenants carefully and use a proper rental contract.
Tourist Licence (Licencia Turística)
In the Valencia region (covering the entire Costa Blanca), any property rented for short-term holiday use must have a tourist licence issued by the Generalitat Valenciana. Advertising or operating without one is illegal and carries fines of €10,000–€600,000. Andalusia (Costa del Sol) has similar requirements under the Junta de Andalucía. The rules are enforced: platforms like Airbnb and Booking.com now require a licence number before listing a property in Spain.
Requirements for the licence (Valencia region):
- A valid cédula de habitabilidad (habitation certificate) confirming the property meets minimum living standards
- Liability insurance covering guests (minimum €150,000 cover)
- The property must have air conditioning and heating, a fully equipped kitchen, Wi-Fi, and a first-aid kit
- A complaint form (hojas de reclamaciones) must be available for guests
- The property must be registered with the local police — guest passport details must be reported within 24 hours of check-in
The application is submitted online through the GVA (Generalitat Valenciana) website. Processing takes 2–8 weeks, and the licence is free to obtain. Once approved, you receive a registration number (format: VT-XXXXXX-A) that must appear on all advertising. Many gestors or property managers can handle the application for €200–€400.
Important change (2024–2025): The Valencia region introduced new restrictions on tourist licences in certain municipalities, including caps on the number of licences issued. Before buying a property specifically for holiday letting, verify with the local town hall (ayuntamiento) that new licences are still being issued in that area.
Tax on Rental Income
Spain taxes rental income differently depending on your residency status, and the difference is significant:
| Resident Status | Tax Rate | Deductions Allowed? | Filing |
|---|---|---|---|
| EU / EEA resident | 19% on net profit | Yes — mortgage interest, IBI, community fees, insurance, repairs, management fees, depreciation | Quarterly modelo 210 |
| Non-EU resident | 24% on gross income | No deductions permitted | Quarterly modelo 210 |
| Spanish tax resident | 19–47% (progressive scale) | Yes — plus 60% reduction for long-term lets | Annual IRPF return |
The difference between EU and non-EU treatment is dramatic. An EU-resident landlord earning €12,000 gross with €5,000 in deductible expenses pays 19% on €7,000 = €1,330. A non-EU resident on the same income pays 24% on €12,000 = €2,880 — more than double. UK buyers post-Brexit are classified as non-EU for this purpose.
Tax returns are filed quarterly using modelo 210. Most non-resident landlords hire a gestor (fiscal representative) to handle filings at €150–€300 per year. You must also declare any periods when the property is empty — Spain charges an imputed income tax for vacant periods (1.1% of catastral value, taxed at 19% or 24%).
What Drives Rental Demand
After analysing thousands of rental listings and guest enquiries, certain features consistently correlate with higher occupancy and higher nightly rates. Here are the factors that matter most, in rough order of importance:
| Feature | Impact on Demand |
|---|---|
| Beach proximity (< 500m) | Strongest single driver of bookings and price per night |
| Swimming pool (communal or private) | Essential for family bookings; no pool = significantly fewer enquiries |
| Air conditioning | Required for tourist licence; without it, no summer bookings |
| Wi-Fi (fast, reliable) | Expected as standard; poor Wi-Fi = negative reviews |
| Parking space | Major plus for guests arriving by car or renting one |
| 2+ bedrooms | Families and groups dominate summer demand; studios and 1-beds have limited appeal |
| Outdoor terrace / balcony | High impact on perceived quality and guest satisfaction |
| Modern kitchen and bathroom | Dated interiors reduce nightly rates by 15–25% vs renovated equivalents |
The single most important thing to understand: location is king. A modest two-bedroom apartment 200 metres from the beach will outperform a beautifully renovated three-bedroom apartment 2 km inland, every time. If your primary goal is rental income, buy as close to the sea as your budget allows.
Best Areas for Rental Income
Torrevieja (beachfront neighbourhoods): Playa del Cura, Acequión and Playa de los Locos offer the strongest short-term rental demand on the southern Costa Blanca. Year-round tourism (including a large winter snowbird community) means occupancy holds up better than in purely summer destinations. Two-bedroom apartments within 300 metres of the beach are the sweet spot. Prices start from around €130,000–€160,000 for older stock, €200,000+ for renovated units.
Orihuela Costa: La Zenia, Playa Flamenca and Cabo Roig attract a consistent holiday rental market, particularly families and golfers. The presence of La Zenia Boulevard shopping centre and multiple golf courses creates demand beyond just beach tourism. Two and three-bedroom apartments with communal pool are the most rentable format.
Fuengirola (Costa del Sol): Fuengirola benefits from stronger year-round demand than most Costa Blanca towns, thanks to a large resident foreign population, good transport links (Cercanías train to Málaga) and a busy tourist calendar. Prices are higher (€250,000+ for a two-bedroom near the beach), but so are achievable nightly rates (€80–€150/night in summer).
Properties with Rental Potential
These listings are in high-demand rental locations — close to the beach, with communal pools, and in the most-searched areas:
€149,0002-Bed Apartment near Playa del Cura
Torrevieja · Playa del Cura
€320,000Seafront 3-Bed in Acequión
Torrevieja · Acequión
€387,950Sea View 3-Bed in El Tejar
Fuengirola · El Tejar
Realistic Expectations
We deliberately do not publish projected rental yields, because they vary enormously depending on location, property condition, management quality, pricing strategy and seasonal factors. Anyone quoting you a firm “8% net yield” on a Spanish property is oversimplifying.
What we can say with confidence:
- Occupancy: Well-managed holiday properties in prime locations achieve 60–80% occupancy during the May–October season. Year-round occupancy (including winter lets) can reach 70–85%.
- Management costs: Professional property management companies charge 15–25% of gross rental income, typically including guest communication, check-in/check-out, cleaning coordination, linen, and maintenance. Some charge a flat monthly fee instead (€150–€300/month).
- Running costs: IBI, community fees, insurance, utilities during turnovers, and annual maintenance will consume another 15–20% of gross income. See our annual costs breakdown for details.
- Platform fees: Airbnb charges 3% to hosts; Booking.com charges 15%. Direct bookings (your own website or repeat guests) avoid these fees but require more marketing effort.
The strongest rental performers share three characteristics: they are within walking distance of a good beach, they have a pool, and they are priced to generate volume bookings rather than squeezed for maximum per-night revenue. Consistency beats peak pricing.
For a step-by-step walkthrough of the buying process, see our complete guide to buying property in Spain. To understand the full cost of ownership, read our annual property costs guide.