Long-Term vs Short-Term Rental in Spain: Legal Aspects

🏡 Introduction: Long-Term vs Short-Term Rental – What Are the Differences?

Renting property in Spain is a popular way to generate income, but the choice between long-term and short-term rental has significant legal and tax implications. Both forms are governed by different regulations and involve different obligations for the owner.

📜 Legal Basics of Renting in Spain

Long-Term Rental (Alquiler de larga duración):

• Regulated by the Tenancy Act (Ley de Arrendamientos Urbanos – LAU, 29/1994).
• Applies to contracts for a period longer than 12 months.
• Protects tenant rights, including the right to extend the contract for up to 5 years (or 7 years if the landlord is a company).
• Does not require a tourist license.

Short-Term Rental (Alquiler turístico):

• Regulated by the regulations of autonomous communities (each region has its own regulations).
• Applies to rentals for a period shorter than 12 months, usually by the day or week.
• Requires registration and a tourist license (Licencia turística).
• Must meet specific standards (equipment, safety).
• Subject to special tax regulations.

✅ Advantages and Disadvantages of Long-Term and Short-Term Rentals

🏠 Long-Term Rental – Pros and Cons

Advantages:

• 📊 Stable income: Regular monthly inflows.
• ⚖️ Simpler regulations: Does not require a tourist license.
• 💰 Lower operating costs: No need to hire a cleaning company or guest services.
• 🛡️ Strong legal protection for the owner in case of breach of contract.

Disadvantages:

• ⏳ Long contract terms: The tenant has the right to extend the contract for up to 5 years (7 years for companies).
• 🚫 Difficulties with eviction: Evicting a non-paying tenant can take many months.
• 📉 Lower income during tourist seasons: Potentially lower profits compared to short-term rentals.

🏨 Short-Term Rental – Pros and Cons

Advantages:

• 💰 Higher income: Potential for significantly higher profits during the tourist season.
• 🗓️ Flexibility: Ability to use the property at any time.
• 🌟 No restrictions on contract length: Ability to adjust prices according to the season.

Disadvantages:

• 📑 Requirement to obtain a license: Tourist rentals require registration and meeting standards.
• 💸 Higher operating costs: Cleaning, guest services, marketing.
• ⚖️ Strict regional regulations: Potential penalties for illegal rentals.
• 🛡️ Changes in the law: Regions such as Barcelona or the Canary Islands are restricting short-term rentals.

📜 Legal Requirements for Long-Term Rentals

Rental Agreement (Contrato de arrendamiento):

• Must be in writing.
• Should include: rent amount, payment terms, duration of the contract, conditions regarding the deposit and obligations of the parties.

Duration of the contract:

• Minimum rental period: 12 months.
• The tenant has the right to extend the contract for 5 years (or 7 years if the owner is a company).
• After 5 (or 7) years, the contract can be automatically extended for another 3 years if neither party gives notice.

Deposit (Fianza):

• According to the LAU law, the deposit is at least the equivalent of one month's rent.
• The deposit must be submitted to the appropriate register of the autonomous community (e.g., in the Instituto de la Vivienda in Andalusia).

Taxes:

• Long-term rental is subject to income tax (Impuesto sobre la Renta de las Personas Físicas – IRPF).
• Residents: Can deduct up to 60% of rental income when filing taxes.
• Non-residents: Tax is 19% (EU citizens) or 24% (non-EU) with no possibility of deductions.

📝 Legal Requirements for Short-Term Rentals

Tourist License (Licencia turística):

• Mandatory in all regions for rentals shorter than 12 months.
• The process of obtaining a license includes:
  • Submitting an application at the city hall or the appropriate register of the autonomous community.
  • Meeting minimum standards (equipment, ventilation, fire extinguishers, first aid kit).
  • Receiving a registration number that must be included in advertisements (e.g., on Airbnb, Booking).

Equipment requirements:

• 📺 Television and basic household appliances.
• 🛏️ Adequate number of beds corresponding to the declared capacity.
• 🚒 Fire extinguisher and first aid kit.
• 🌬️ Ventilation system or air conditioning (in regions with high temperatures).

Taxes:

• Income from short-term rentals is taxed under IRPF (for residents) or IRNR (for non-residents).
• Non-residents pay a tax of 19% (EU) or 24% (non-EU).
• Operating costs (cleaning, platform commissions) can be deducted from income.

⚠️ Penalties for Non-Compliance with Rental Regulations in Spain

Long-term rental – regulatory violations:

• Lack of written agreement: fine up to €3,000.
• Illegal retention of the deposit or lack of registration: €600–3,000.

Short-term rental – regulatory violations:

• Lack of tourist license: €2,000–30,000 (depending on the region).
• Failure to include the license number in the advertisement (e.g., on Airbnb): €300–3,000.
• Renting above the allowed limit of accommodations: €4,000–40,000.

📍 Examples of penalties in popular regions:

• Barcelona: Ban on tourist rentals in certain neighborhoods and fines up to €60,000 for illegal rentals.
• Canary Islands: License requirement and fines up to €30,000 for non-compliant rentals.
• Valencia: Fine up to €6,000 for lack of a license or registration number.

💡 Which Rental Form Is More Profitable?

Comparison Using an Apartment in Alicante (Costa Blanca):

Long-Term Rental:

• Monthly rent: €800
• Annual income: €9,600
• Costs (taxes, maintenance): €2,000
• Net income: €7,600

Short-Term Rental:

• Price per night: €120
• Occupancy: 180 days a year (50%)
• Annual income: €21,600
• Costs (cleaning, commissions, license, taxes): €7,000
• Net income: €14,600

Short-term rental provides higher income but requires more work and is burdened with higher operating costs and taxes.

🛡️ Summary – Long-Term or Short-Term Rental?

Choose long-term rental if:

• You are looking for stable, passive income.
• You do not want to deal with tourist services and bookings.
• You value lower legal risk and do not want to obtain a license.

Choose short-term rental if:

• You want to maximize profit during tourist seasons.
• You have time or the ability to hire a company to manage the rental.
• Your property is located in a tourist-attractive region.

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