Short-Term vs. Long-Term Lease Agreements for Buy-to-Let in Spain

Short-term vs. long-term lease agreements for buy-to-let in Spain is one of the most common decisions international investors must make when purchasing a rental property. The rental strategy you choose will impact your expected yield, legal obligations, tax exposure, and management intensity.

Understanding the differences between these two approaches—and knowing which is better suited to your goals—is key to maximising profitability while minimising risks.

Comparing short-term and long-term rental strategies

Spain offers diverse rental opportunities, from tourist-heavy coastal towns to stable, long-term residential markets. Each strategy comes with its own pros, cons, legal frameworks and income models.

What is a short-term lease?

A short-term lease typically refers to holiday rentals or seasonal stays under 30 days, often marketed through platforms like Airbnb or Booking.com. These are common in high-demand tourist areas such as Barcelona, Málaga, Alicante, or coastal resorts.

What is a long-term lease?

A long-term lease is generally defined as a tenancy agreement lasting six months or more, with tenants using the property as their primary residence. This is more common in cities like Madrid, Valencia or Seville, and in commuter zones around them.

Pros and cons of short-term rental agreements

Short-term rentals can offer higher gross yields and more flexibility, but they also come with added complexity.

Advantages

Higher nightly rates, especially in high season
Flexibility to use the property personally
Lower wear and tear per stay
Opportunity to adjust pricing dynamically

Disadvantages

Heavy regulation in many cities (e.g. license requirements)
Higher vacancy rates off-season
Higher management and cleaning costs
Local community resistance in some tourist areas

Buy-to-Let Spain helps clients assess whether a short-term strategy is viable based on location, zoning, and market saturation before purchase.

Pros and cons of long-term lease agreements

Long-term lets are often the preferred route for investors seeking stable, passive income with fewer regulatory hurdles.

Advantages

Stable monthly income and long-term occupancy
Fewer licensing restrictions
Easier tax reporting
Predictable cash flow

Disadvantages

Lower income potential compared to short-term in tourist zones
More legal rigidity (e.g. eviction process if non-payment)
Less flexibility to use or sell the property short-notice

We recommend long-term leases in metropolitan areas with high rental demand from students, professionals, or expatriates.

Legal considerations for each lease type

Spain has separate legal frameworks for each rental model:

Short-term legal framework

Subject to local tourism laws and regional regulations
Requires a tourist rental license in many regions
Must comply with safety, accessibility, and registration obligations
Heavily monitored in cities like Barcelona, Palma, and Valencia

Long-term legal framework

Regulated under the Ley de Arrendamientos Urbanos (LAU)
Default duration is five years (or seven for companies)
Limited ability to raise rent or terminate early
Fewer inspections or licensing requirements

Our legal team ensures all lease agreements are correctly drafted and compliant with regional and national law.

Tax implications for non-resident investors

Choosing between short-term and long-term rentals also affects how much tax you’ll pay and how you file.

Short-term tax treatment

Taxed as business activity (Modelo 210 trimestral or Modelo 130 if operating as an autónomo)
Deductible expenses include cleaning, marketing, utilities, depreciation
Subject to VAT in some cases
Higher audit and compliance obligations

Long-term tax treatment

Taxed as rental income (Modelo 210 annual for non-residents)
Fewer deductions, but less complexity
No VAT obligations

Buy-to-Let Spain provides fiscal structuring services to help you minimise exposure and remain fully compliant under Spanish tax law.

Key factors when choosing your lease strategy

Your ideal rental approach depends on several factors. We help investors clarify:

Desired yield vs. income stability
Risk tolerance and time horizon
Property location and demand profile
Legal feasibility of short-term rentals
Availability of local management partners
Personal use of the property

Investors seeking high returns and are willing to manage operations actively may prefer short-term rentals in tourist areas with licenses. Those seeking passive income with minimal oversight may be better served by long-term strategies in urban areas.

Combining both: hybrid strategies

Some investors combine both lease models, for example:

Short-term in high season (summer months)
Medium or long-term in low season
Rent to students for 9–10 months, then list short-term in summer

This requires flexible contracts and expert management, but it can increase overall returns.

FAQs about short-term vs. long-term rental investments

Which rental model is more profitable?

Short-term rentals generally offer higher gross yields but involve more costs and complexity. Long-term rentals are more stable and easier to manage. Profitability depends on location and execution.

Do I need a license for short-term rentals?

Yes, in many areas. Each autonomous region (Comunidad Autónoma) sets its own rules, and some cities (like Barcelona) severely restrict new licenses.

Can I switch between short-term and long-term?

Legally, yes—but contracts, licenses and taxation differ. It’s important to have the right structure and documentation for each switch. We advise our clients on how to transition correctly.

What type of property is best for short-term vs. long-term?

Tourist apartments, beachfront studios, and centrally located flats perform better as short-term lets. Larger family homes or student apartments are better suited to long-term leases.

Let us help you choose the right rental model

Selecting the right lease agreement is one of the most strategic decisions in your buy-to-let journey. The wrong choice can lead to regulatory issues, poor yields, or unnecessary stress.

Buy-to-Let Spain works with international investors to design and execute profitable rental strategies based on your goals, risk profile and location. Whether you’re targeting high-yield vacation lets or steady long-term tenants, our team handles legal setup, tax planning, property sourcing and ongoing advice.

→ Ready to optimise your rental strategy? Book a 1:1 strategy session with our experts and build your portfolio with confidence.