Short-term vs. long-term rentals in Spain: which is more profitable?

Deciding whether to place a Spanish property on the long-term rental market or list it as a short-term holiday let is the most critical decision an investor will make.

While the fundamental appeal of Spanish real estate remains unchanged, the operational reality of being a landlord in 2026 has shifted dramatically. With sweeping new national and regional regulations transforming the tourist sector, the answer to which model is more profitable requires looking far beyond the nightly rate.

Is rental property in Spain a good investment?

Yes, investing in property in Spain is absolutely worth it, but the landscape in 2026 is no longer defined by the post-pandemic "gold rush". Instead, the market is undergoing a structural shift toward professionalisation and strict regulatory compliance.

Spain remains an absolute tourism titan, with a record-breaking 94 million international arrivals recorded in 2024, a trend that has only strengthened into 2026. This guarantees robust international demand for holiday accommodation. However, national and local regulations have aggressively pruned the market of unlicensed supply. While this has created hurdles for casual hosts, it has inadvertently created a "scarcity premium" for legal operators. Across Spain, active short-term listings decreased by 4% year-over-year, yet the Revenue Per Available Room (RevPAR) grew by 5%.

The new regulatory reality for short-term rentals (2026)

Before calculating potential profits, buyers must understand that a property's legal status is its most valuable asset. The safest and most profitable holiday rentals are no longer just the ones with the best views, but those with the clearest tourist licences and community approvals.

Holiday rentals in Spain have changed radically. The current legal framework includes:

• Community veto power: Since April 2025, the Horizontal Property Law empowers communities of owners to prohibit new tourist apartments with a 60% majority vote.
• The return to regional licensing: While a national registration number (NRUA) and annual reporting requirement were introduced in 2025, a landmark Supreme Court ruling in May 2026 annulled the national registry. Therefore, your regional tourist licence (such as the VUT: Vivienda de Uso Turístico) remains the sole mandatory legal requirement needed to list your property on platforms like Airbnb or Booking.com.
• Police registration requirement (RD 933/2021): Running a short-term let is essentially running a hospitality business. Owners are legally required to collect guest ID details and submit them directly to Spanish law enforcement authorities via the official platform within 24 hours of arrival.
• Severe financial penalties: The era of "list it and see" is definitively over. Operating without a valid licence or bypassing community approval carries massive risks. First-time offences can trigger fines of up to €30,000. In strictly regulated regions, severe or continued violations can result in astronomical fines of up to €600,000.

What gives the best return in Spain?

When asking whether long-term or short-term rentals offer the best return, it is crucial to separate gross yield from net profit. To maximise your returns, you must apply the right buy-to-let investment strategies and legal insights for your specific property type.

Matching property type to the strategy: Small, centrally located apartments or frontline beach properties are ideal for lucrative holiday lets. Conversely, larger detached homes located near international schools, transport links, or business hubs perform significantly better—and face far less regulatory friction—as stable long-term rentals.

The short-term rental model in Spain (Holiday lets)

• Income potential: Holiday rentals typically generate higher gross income per night, especially in popular coastal areas, major city centres, and highly sought-after golf properties in Spain. During peak seasons, weekly rental rates can significantly outperform monthly long-term rents, making short-term letting highly attractive for maximising cash flow. In premium areas, gross yields can reach 6% to 12% annually.
• The reality of operating costs: Hard data for 2025 and 2026 reveals that the true annual operating expenses for a short-term rental range between €8,000 and €14,000. Platform commissions (from sites like Airbnb and Booking.com) represent the largest slice of this expense, closely followed by frequent cleaning and utilities. Because utilities can consume 20% to 25% of operating costs, modern investors are increasingly forced to optimise energy efficiency—such as installing smart thermostats and LED lighting—just to protect their profit margins.
• Owner flexibility: A major qualitative benefit of the short-term model is personal use. Short-term rentals allow owners to simply block out calendar dates to use the property themselves for family holidays.

The long-term rental model in Spain

• The supply squeeze & surging demand: Spain's rental market is highly competitive, largely because the supply of long-term properties in major cities has dropped by 40% to 50% compared to pre-2018 levels. Recent industry data shows that up to 17% of all Spanish rentals are snapped up within 24 hours of being listed. This extreme demand has pushed average urban rents to all-time highs; in premium markets like Barcelona, average long-term rents now exceed €20 per square metre.
• Income potential: Long-term rentals offer a more stable and predictable income stream, with gross yields typically ranging from 3% to 6% annually. In cities with strong residential demand, such as Valencia, gross yields currently hover between 5.8% and 6.1%.
• Mitigating eviction fears: A common fear among landlords is dealing with a non-paying tenant, as legal evictions in Spain can take six months or longer. However, savvy investors neutralise this risk entirely by purchasing Rent Default Insurance (Seguro de Impago). This policy covers lost rent during legal disputes and pays for eviction legal fees, making the long-term model incredibly secure.
• Personal use restrictions: While long-term contracts offer lower operational costs, they lack flexibility. Under Spain's Urban Leases Act (LAU), you cannot easily regain possession of the property. You can only terminate a lease early for personal or immediate family use after the first 12 months have passed, provided this explicit clause was included in the initial contract, and it requires two months' written notice.

The taxation factor: hidden costs for empty days

Taxation plays a massive role in calculating your final profit. Non-resident owners must declare rental income in Spain regardless of their strategy. However, the short-term model carries hidden tax obligations that many investors overlook.

You do not just pay tax on the rental income you earn. You must also pay local property tax (IBI) and an "imputed income tax" for any days of the year the property sits empty and unrented. Because short-term rentals naturally experience higher vacancy rates during the off-season, they attract a higher imputed tax bill compared to a long-term rental that is occupied 365 days a year.

Furthermore, deductions depend on your residency:

• EU Residents: Non-resident landlords from EU countries pay a flat 19% tax on net rental income, meaning they can deduct allowable expenses such as management fees, cleaning, and utilities.
• Non-EU Residents (Including the UK): Historically, non-EU residents paid 24% on gross income without deductions. However, recent 2026 legal shifts mean property owners are now successfully claiming deductions for legitimate business expenses, levelling the playing field significantly for British investors who previously faced much higher tax burdens on their short-term properties.

The hybrid alternative: maximising the calendar in Spain

Given the strict regulations on holiday lets and the rigid tenant protections surrounding long-term rentals, many savvy investors are adopting a "hybrid" strategy.

This involves renting the property as a short-term holiday let at premium nightly rates during the high-yield summer peak (June to September). Then, during the quieter winter months, the property is switched to a medium-term rental targeting digital nomads, relocating executives, and seasonal "snowbird" retirees on 3-to-6-month contracts. This hybrid approach guarantees a stable cash flow through the winter, completely eliminates empty periods (and the associated imputed income tax), and maximises summer profits.

The verdict: which is more profitable in Spain for 2026?

If you are asking if it is profitable to invest in short-term rentals in Spain today, the answer is: Yes, but only if you operate as a fully compliant professional.

If you hold a legal tourist licence—or buy a new-build property where the community statutes explicitly permit holiday lettings from the outset—short-term rentals will generally yield the highest potential net profit, provided you are in a premium coastal or city centre location.

However, for the average foreign investor seeking a passive income stream without the regulatory headaches, management fees, or unpredictable vacancy rates, long-term renting is the cleaner, safer, and ultimately more predictable profit path.

To explore investment properties across Spain perfectly suited for either reliable long-term tenancy or lucrative holiday letting, search thousands of verified listings today on thinkSPAIN.com.