Long-term letting on the Costa del Sol: contract, deposit and tenancy law

Three types of letting

What is called "long-term letting" on the coast covers three legally distinct arrangements:

• Letting as a home. The tenant lives there permanently. A minimum of five years, or seven if the landlord is a company.
• Letting for a use other than housing. Temporary lets, for example for work, study or the winter, while the tenant has a home address elsewhere. The agreed term applies, with no compulsory extension.
• Tourist letting. Short stays marketed through tourist channels, under Andalusian tourism rules. See the tourist licence.

It is not the title of the contract that decides, but actual use. A "seasonal" contract with a family who enrol their children at a local school is, legally, a residential tenancy with a five-year term. If you opt for a temporary let, state the genuine reason in the contract.

Committed for five years

If you agree a term shorter than five years, the contract is extended annually by law until five years are reached. The obligation is one-sided:

• You cannot ask the tenant to leave after the first year; he can terminate after six months with thirty days' notice.
• After five years, if neither side gives notice, a tacit extension of up to three years follows.
• If you do not want to renew, you must give four months' notice; the tenant gives two.

There is one way out: you can recover the property earlier for yourself, a first-degree relative or your spouse after divorce. This must be stated expressly in the contract, the first year must have passed and you must give two months' notice. Rent can also only be increased if this has been agreed in writing.

Deposit and additional security

The statutory deposit is one month's rent. You may also ask for additional security, such as an extra deposit or bank guarantee, up to a maximum of two months' rent for contracts of up to five years. At a rent of €1,100 the maximum is therefore €3,300 in total; asking for six months in advance is not permitted. Whether the deposit has to be lodged with the Andalusian authorities depends on the date of the contract, as the regional rules have changed recently. Have your lawyer check this.

Under the tenancy law, the costs of management and of drawing up the contract are borne by the landlord.

Tax for non-residents

If you do not live in Spain, rental income is subject to Spanish non-resident income tax, declared on Modelo 210. As of 2026:

• Residents of the EU, Iceland, Norway and Liechtenstein pay 19% on net income. Deductible items include IBI (property tax), community fees, insurance, mortgage interest, repairs, management fees and depreciation of 3% a year on the building value.
• Residents outside the EEA pay 24% on gross rent, with no deductions.
• The well-known 50% to 60% reduction on rental income applies to Spanish tax residents, not to non-residents.

Have your situation reviewed by an independent tax adviser.

Worked example: a two-bedroom flat in Fuengirola

A 68 m² flat in Fuengirola with an existing mortgage is let at €1,150 a month. The building value according to the land registry is €84,000. The amounts are indicative.

For comparison: in the same example, holiday letting brings in around €19,500 gross but around €5,950 before tax, against €9,000 for long-term letting. Holiday letting also takes 120 to 200 hours a year, against 10 to 15. The picture can change for frontline properties in Marbella or Estepona, if you manage the property yourself, or if you plan to sell within two or three years: a sitting tenant reduces the pool of buyers. See holiday versus long-term letting and property management.

CostaVista guides you, together with our local partners, in choosing how to let, estimating a realistic rent and setting up the contract. Get in touch to discuss your property or your purchase plans.

General information, as of October 2026. This is not legal, tax or financial advice; for your own situation, consult an independent specialist.