Long-Term Rental in Spain: An Opportunity You Shouldn’t Overlook in 2025

Long-term rentals in Spain have become one of the most reliable and tax-efficient property investment strategies in 2025. With rental demand surging, especially in key cities and commuter zones, and new housing laws providing legal clarity and financial incentives, landlords can now enjoy stable returns while minimizing risk.

This practical guide is crafted for English-speaking buyers, expat landlords, and international investors looking to purchase and rent out property in Spain. We’ll walk you through every step – from understanding rental contract types and legal obligations, to navigating tax rules, rental yield trends, tenant protections, and compliance requirements.

By the end of this guide, you’ll be equipped with the knowledge and tools to enter Spain’s long-term rental market confidently, build a secure property portfolio, and take full advantage of the legal and tax frameworks in place for 2025.

Understanding Spanish Rental Contracts (LAU and Contract Types)

Types of Rental Contracts in Spain Under the LAU

Spain’s rental market is structured by the Ley de Arrendamientos Urbanos (LAU) – the Urban Leases Act – which clearly differentiates between long-term leases, seasonal contracts, and short-term tourist rentals. Understanding these categories is crucial to choosing the right legal framework for your rental situation in Spain.

Main Categories of Rental Agreements

Long-Term “Vivienda” Lease
This is the standard residential lease under the LAU, meant for habitual residence. It includes:

• Minimum lease term of 5 years (7 if the landlord is a company)
• Automatic renewal rights
• Rent control tied to inflation or government index
• Strong legal protection for tenants

This is the safest and most stable option for tenants planning to live in Spain long-term.

Seasonal or Mid-Term Rental
Also covered by the LAU, this type of contract is for temporary stays (e.g., work assignments, study, medical treatment) and usually lasts 6–11 months. However, landlords sometimes offer consecutive short leases to avoid long-term obligations.

Holiday or Short-Term Rental
These are not governed by the LAU but by regional tourism laws. Designed for short stays (a few days to weeks), they:

• Require a tourist license
• Are subject to regional regulations
• Offer no tenant protection under rental law
• Often involve high turnover and platform-based bookings (e.g., Airbnb)

Comparison Table: Long-Term vs. Seasonal vs. Tourist Rentals

Key Insight

When renting in Spain, what matters is not just the contract name, but how the property is actually used. A tenant who lives in a rental as their main home may be entitled to long-term lease protections—even if the contract says otherwise.

Choosing the right lease type helps you avoid legal uncertainty and ensures proper compliance with Spanish rental laws. For residential stability, a vivienda lease remains the most reliable option.

Lease Duration and Renewal Terms in Spain

Spanish rental law, especially after recent reforms, is designed to promote tenant stability and offer long-term housing security. For landlords and tenants alike, understanding the mandatory lease periods and renewal options under the LAU is key to managing expectations and legal obligations.

Minimum Lease Duration: The 5- or 7-Year Rule

Spanish law provides automatic lease extensions, even if the initial contract specifies a shorter period.

• If the landlord is an individual, the tenant has the right to stay for up to 5 years
• If the landlord is a legal entity (company), the term extends to 7 years
• Contracts are often written for 1 year, but renew automatically each year until the 5- or 7-year threshold is reached—as long as the tenant wishes to remain

This framework ensures housing continuity and protects tenants from early eviction, except in specific legal scenarios.

Optional 3-Year Renewal After the Initial Term

After the 5- or 7-year mandatory period:

• The lease can renew automatically for 3 more years by tacit agreement
• If either party wants to terminate, notice is required:
  • Landlord: 4 months’ notice
  • Tenant: 2 months’ notice

This post-term extension provides additional predictability and flexibility, especially in stable rental relationships.

Tenant’s Right to Early Termination

Tenants are allowed to leave the rental after 6 months, provided they:

• Give at least 30 days’ written notice
• Accept a possible penalty clause, if included in the contract (e.g. one month’s rent per year remaining)

This clause balances tenant flexibility with the landlord’s financial planning.

Landlord’s Right to Reclaim Property for Own Use

Under certain conditions, the landlord may reclaim the property:

• Only after 12 months
• Only if the contract explicitly includes this clause
• Only for personal or close family use

If exercised, the landlord must occupy the property within 3 months or face legal consequences (such as the tenant’s right to return).

Lease Duration Summary Table

Why It Matters for Landlords and Investors

These lease duration rules create predictable, low-turnover rental scenarios, which are ideal for long-term real estate investors. With proper tenant selection and contract drafting, you can benefit from:

• Stable rental income over multiple years
• Lower vacancy rates
• Fewer contract renegotiations or legal disputes

For tenants, it guarantees residential continuity and clear exit terms.

Landlord and Tenant Obligations in Long-Term Rentals

Under Spain’s Urban Leases Act (LAU), both landlords and tenants have well-defined responsibilities in long-term residential contracts. These duties aim to maintain the habitability of the property, reduce disputes, and protect legal rights on both sides.

Landlord Responsibilities in Spain

A landlord renting a property for long-term use must ensure the tenant can live in safe and decent conditions. According to Spanish rental law, this includes:

• Delivering the property in a habitable state (safe structure, working plumbing, heating, and electricity)
• Handling major repairs, such as:
  • Structural damage
  • Plumbing or electrical failures not caused by tenant misuse
• Registering the security deposit with the regional housing authority within 1–2 months of lease start
• Returning the deposit (minus damages) within one month after the lease ends
• Paying property taxes (IBI) and community fees, unless otherwise agreed
• Respecting the tenant’s privacy: Entry into the rental unit requires prior consent or proper notice

Tenant Responsibilities in Spain

Tenants must use the rental responsibly and maintain it throughout their stay. Key obligations include:

• Paying rent on time
• Performing minor maintenance, such as:
  • Replacing bulbs
  • Unclogging drains
• Reporting and covering damages caused by misuse
• Respecting community rules (in apartments or shared buildings)
• Returning the property in similar condition at lease end (excluding normal wear)
• Avoiding unauthorized subletting or major alterations without landlord consent
• Using the property legally (no illicit activity)

What the Law Forbids

Spanish rental law contains strict protections to prevent abuse from either party:

Legal Remedies and Conflict Prevention

To reduce the risk of legal disputes, it is highly recommended to:

• Clearly outline all duties in the rental agreement
• Keep written records of inspections, communications, and repairs
• Act promptly in case of damage, non-payment, or legal breaches

Both landlords and tenants have the right to enforce the contract legally. Tenants can demand urgent repairs if the property becomes uninhabitable. Landlords, in turn, may pursue eviction proceedings if the tenant breaches key obligations (more on this in the eviction section).

Rental Income Taxation in Spain (IRPF vs IRNR)

How your rental income is taxed in Spain depends primarily on your residency status. Spanish law separates tax obligations into two main regimes:

• IRPF for Spanish tax residents
• IRNR for non-resident property owners

Making the right distinction is essential for compliance and tax efficiency.

For Spanish Tax Residents (IRPF Regime)

If you’re fiscally resident in Spain, your rental income is taxed under the Impuesto sobre la Renta de las Personas Físicas (IRPF). The income is added to your general taxable base and subject to progressive tax rates.

What you can deduct:

• Mortgage interest
• Maintenance and repair costs
• Property insurance
• Agency fees and legal expenses
• Depreciation

Special tax benefits for long-term rentals:

• 50% exemption on net rental income for new contracts as of 2024
• Up to 90% exemption possible if:
  • You reduce rent in a “stressed area”
  • Rent to young tenants (18–35 years)
  • Renovate or refurbish the property to improve energy efficiency

These incentives fall under the new Housing Law (Ley por el Derecho a la Vivienda) and vary by region and lease conditions.

For Non-Residents (IRNR Regime)

Non-resident landlords fall under Impuesto sobre la Renta de no Residentes (IRNR). Tax treatment depends on your country of residence:

Key points:

• EU/EEA citizens can deduct eligible expenses (but do not benefit from the 50% or 90% exemptions).
• Non-EU residents pay 24% on the full rental amount with no deductions.
  • Example: A UK landlord renting at €1,000/month will owe €240/month in tax, regardless of expenses.
• Legal challenges are ongoing over the disparity, but as of 2025, this difference remains enforced.

Tax Filing Obligations

Understanding how and when to declare rental income helps avoid penalties.

• Spanish tax residents file annually via the IRPF return (Modelo 100), usually between April and June.
• Non-residents must file Modelo 210 quarterly, within 20 days of each quarter’s end.

Late or incorrect filings can result in interest charges or fines.

Rental Yields by Region: What Returns Can You Expect?

Spain remains a competitive market for rental property investment, offering strong gross yields compared to many Western countries. However, returns vary greatly by region, and choosing the right location is key to maximizing your rental income.

National Rental Yield Trends in 2025

As of Q3 2025:

• Average gross yield nationally: ~5.4%
• In early 2023, yields peaked at 7.1%, driven by high rents and slower price growth
• Rising property prices have slightly compressed yields, though returns remain attractive compared to much of Europe

Gross yield = (Annual rental income ÷ Purchase price) × 100

Top-Performing (High-Yield) Markets

Certain secondary cities and less-saturated regions continue to outperform, offering yields above 7% thanks to lower entry prices.

Examples:

• Lleida (Catalonia): Over 8%
• Murcia, Jaén: In the 7–8% range
• Huelva, Almería (Andalusia) and inland parts of Valencia: Around 7%

These markets benefit from low acquisition costs and strong rental demand, particularly for long-term leases aimed at locals or workers.

Lower-Yield (Prime) Markets With Stability

More expensive areas tend to show modest yields, but often compensate with higher capital appreciation and consistent tenant demand.

These markets are ideal if your strategy prioritizes long-term value over short-term cash flow.

Key Regional Factors Affecting Yield

• Tourism-driven areas often have high prices due to foreign demand, limiting long-term rental returns
• Commuter towns near major cities can offer better ROI if transport links are strong
• Local economic drivers (university hubs, logistics centers, administrative capitals) can create high and stable rental demand

Tips for Evaluating Rental Potential by Location

To choose the best area for investment:

• Use platforms like Idealista, Fotocasa, or Tinsa for yield data by city/district
• Compare price per square meter vs rental rate to spot inefficiencies
• Research rental regulations in each region — some enforce rent caps in stressed markets
• Consult municipal urban plans to identify growth areas and upcoming infrastructure
  

Navigating the Eviction Process and Tenant Protections

While Spain’s legal system protects landlord rights, the eviction process (desahucio) can be slow and procedural. To act effectively, you must understand both the legal grounds for eviction and the protections granted to tenants under current laws.

Valid Grounds for Eviction

You may initiate eviction proceedings if the tenant:

• Fails to pay rent (even after one missed payment)
• Repeatedly pays late
• Causes serious damage to the property
• Refuses to leave after the lease expires
  

Costs and Financial Considerations

• Uncontested cases: a few hundred euros in legal fees
• Contested cases: may cost €2,000 or more, especially if legal representation and multiple hearings are involved
• Courts typically order the tenant to repay back rent and legal costs, but enforcement may be difficult if the tenant has no assets

Recommendation: Invest in landlord insurance covering:

• Legal fees
• Unpaid rent
• Eviction assistance

Preventive Measures for Landlords

To reduce eviction risk:

• Screen tenants thoroughly:
  • Request payslips, credit checks, previous landlord references
• Use protective lease clauses:
  • Require guarantors
  • Include penalties for late payments
  • Ask for eviction legal insurance (seguro de impago)

Special Cases: Illegal Occupation (Squatters)

Squatters—unauthorized occupants—are subject to a separate fast-track eviction law (Ley de Desahucio Exprés). If you act within 48 hours of occupation, the court may evict quickly. After that window, timelines grow longer and more complex.

Recent Reforms: Stronger Tenant Protections

Under the 2023–2025 housing law reforms, tenants in economic vulnerability may access:

• Mediation processes before eviction
• Extended eviction notice periods
• Mandatory coordination with social services

These reforms aim to balance eviction rights with social protection, particularly during economic hardship or housing crises.

Rent Controls and Regulated “Stressed” Zones

Since 2023, Spain’s Housing Law has introduced rent regulation measures in areas classified as “residentially stressed zones” (zonas de mercado residencial tensionado). These rules can directly impact how landlords set rents, renew leases, and access tax benefits.

What Are “Stressed Zones”?

A stressed zone is a municipality or district where:

• Housing costs exceed 30% of average household income, or
• Rental prices have risen more than 3% above the CPI over the past five years

As of 2025:

• Over 300 zones are designated, covering 8+ million residents
• Includes major cities like Barcelona, Valencia, and parts of Madrid
• Designation lasts 3 years and can be renewed at the regional level

Landlords operating in these areas must comply with special pricing and tax rules.

Rent Caps on New Contracts in Regulated Areas

Large landlords (10+ properties nationwide, or 5+ in the same zone) face strict rent limits:

• New lease rent must not exceed the government reference price index
• Applies even to homes not previously rented, if located in a regulated area

Small landlords have more flexibility, but still face limits:

• Rent increase for a new tenant generally capped at 3% above previous rent
• In some cases, even first-time rentals are subject to reference pricing if the law applies locally

Tip: Use Spain’s official rental price reference tool (Índice de referencia de precios de alquiler) to check allowed rates in your area.

Limits on Annual Rent Increases

Regardless of landlord type or location, Spain enforces nationwide limits on how much rent can be increased during a lease.

• These increases only apply if your lease includes a valid escalation clause
• Without one, rent remains flat throughout the contract term

To comply, landlords should include indexation clauses clearly referencing IRAV or government limits.

Tax Incentives for Affordable Leasing

Spain’s housing law rewards landlords who promote accessible rents in stressed zones.

Key tax deductions:

• 90% tax reduction on rental income if you:
  • Reduce new rent by at least 5% vs the previous contract
  • Property is in a regulated zone
• 70% deduction for:
  • Renting to young tenants (18–35 years) for the first time
• 60% deduction if:
  • You’ve made qualifying renovations within the last two years

These incentives are only available to Spanish tax residents and must be claimed through your IRPF declaration.

Checklist for Landlords in Regulated Zones

Plan Rental Pricing Strategically

Rent controls now apply in many of Spain’s most attractive real estate markets. Whether you’re a private landlord or managing multiple properties, it’s critical to:

• Check if your property is in a stressed zone
• Use the official rental index
• Adapt your lease terms and pricing accordingly
• Explore tax benefits to offset reduced pricing flexibility

This ensures legal compliance, avoids penalties, and can even improve your net post-tax return through well-applied deductions.

Key Legal Clauses for Spanish Rental Contracts

Drafting a legally compliant and well-structured rental contract in Spain is essential to ensure both parties understand their rights and obligations. While the Urban Leases Act (LAU) outlines the framework, the contract itself must specify key elements to avoid ambiguity and protect your investment.

Here are the essential clauses to include in your long-term lease agreement.

Parties and Property Identification

Start with:

• Full legal names of landlord(s) and tenant(s)
• Valid identification (e.g. NIE, DNI, or passport for foreigners)
• Full property address, and ideally, the cadastral reference number for precise identification

Duration and Renewal Terms

• Clearly state the initial lease term (e.g. “1 year”)
• Confirm automatic renewal up to 5 years (or 7 if the landlord is a company), in line with LAU
• If the landlord plans to reclaim the property for personal use, include a clause reserving that right after the first year

Rent, Payment, and Indexation Clause

• Specify the monthly rent amount, due date, and payment method (bank transfer is standard)
• Include any:
  • Grace period (e.g. 5 days)
  • Late payment penalties (if any)
• To legally increase rent annually, include an indexation clause, referencing:
  • The IPC (Consumer Price Index), or
  • The new IRAV index, with the applicable annual cap (e.g. 2.2% in 2025)

Without this clause, rent cannot be raised during the lease term.

Security Deposit and Additional Guarantees

• By law: 1 month’s rent as deposit (fianza) for residential leases
• Mention:
  • That the deposit will be lodged with the regional housing authority
  • Conditions for return (e.g. no major damage, paid utilities, all keys returned)
• Optional: Up to 2 additional months’ rent as:
  • Extra deposit
  • Bank guarantee
  • Guarantor clause

Maintenance and Repairs Clause

Define responsibilities to prevent disputes:

Suggested language:
“Tenant is responsible for minor maintenance and repairs up to €150. The landlord shall cover all major repairs necessary to maintain the property in habitable condition.”

• Require the tenant to report major issues promptly

Use of the Property

Set rules on:

• Subletting (default: not allowed unless landlord agrees)
• Pets, smoking, or commercial use of the premises
• Obligation to follow building/community rules (noise hours, common areas)

Landlord Entry and Inspection

Establish clear access terms:

• Example clause:
  “The landlord may visit the property with at least 24 hours’ notice, for inspections or to show the property to potential buyers or new tenants.”

This protects the tenant’s right to privacy while allowing the landlord reasonable access.

Termination and Notice Requirements

• State the legal notice periods:
  • 4 months (landlord)
  • 2 months (tenant)
• Confirm tenant’s right to terminate after 6 months, with 30 days’ notice
• Optionally include:
  • Early termination penalty (e.g. one month’s rent per remaining year)
  • Procedure if tenant abandons the property
  • Details on reclaiming property for personal use

Optional Clauses and Add-Ons

Attach a signed inventory list (especially for furnished rentals) to help prevent disputes upon move-out.

Drafting with Legal Precision

A thorough lease agreement that reflects Spain’s rental laws and includes clear clauses on duration, rent, use, and maintenance responsibilities is crucial. Not only does it reduce legal risk, but it also sets clear expectations for both parties.

In the next section, we’ll provide a practical checklist for reviewing or drafting a compliant Spanish lease and share examples of model clauses you can reuse.

Making the Most of Spain’s Long-Term Rental Opportunity

As of 2025, Spain’s long-term rental market presents a highly attractive opportunity for landlords and investors. The combination of sustained demand, solid regional yields, and a growing framework of legal and fiscal incentives makes it possible to build a stable, profitable portfolio—provided you understand the rules and plan accordingly.

What Makes Spain’s Rental Market So Appealing?

• Strong tenant demand, both local and international
• Gross rental yields of 5–8% in many areas
• Long-term lease protections that reduce turnover
• Generous tax deductions, especially in regulated areas
• Legal tools for enforcement (eviction, default clauses)

How to Maximize Your Investment Legally and Profitably

To make the most of Spain’s long-term rental framework:

• Choose the right contract: Avoid recurring 11-month seasonal leases if the tenant will live there full time. Always use a LAU-compliant vivienda lease.
• Structure your rent pricing: Check for stressed zone regulations and apply the reference index where required.
• Include the right clauses: Ensure your lease covers rent indexation, duration, deposits, and termination rules to prevent disputes.
• Stay compliant on tax: Use deductions smartly – especially the new 90%, 70%, or 60% IRPF tax breaks for qualifying rentals.
• Protect yourself legally: Understand how to evict non-paying tenants and screen applicants properly.
• Think long-term: Cities like Murcia, Jaén, Lleida, or secondary markets offer high returns, while Barcelona and Madrid provide long-term demand and capital growth.

Final Thoughts: A Well-Informed Landlord Is a Successful One

Whether you’re managing a coastal property in Valencia or a city apartment in Madrid, success in Spain’s rental market comes down to knowledge, compliance, and strategy.

By mastering:

• Rental contract types
• Tenant and landlord obligations
• Rent control rules
• Eviction procedures
• Tax planning techniques

you’ll not only protect your property but turn it into a reliable income-generating asset.

With the right approach, Spain’s long-term rental market offers a blend of financial return, legal clarity, and lifestyle flexibility that few other countries in Europe can match.