Long-term rental on the Costa del Sol is booming, driven by its warm climate, quality of life, and the charm of its coastal towns and cities. While vacation rentals in Estepona remain popular, more and more landlords and tenants are seeing long-term apartment rentals as a stable and profitable option.
With Cabanillas Real Estate’s experience in the local real estate market, this guide will help you understand the advantages of long-term renting, whether you’re a landlord looking for financial stability or a tenant in search of a cozy home on the Costa del Sol.
What is a long-term rental? Definition and key features
Long-term rental is defined as a lease agreement that generally lasts more than a year, establishing an ongoing relationship between landlord and tenant that can extend for several years.
Unlike vacation rentals, where stays are usually limited to days or weeks, this type of contract offers greater stability for both parties and is specifically regulated by the Urban Leasing Law (LAU) in Spain.
The key features that set long-term rentals apart from other types are mainly their duration over time, the formalization through a detailed contract, and a focus on creating a permanent home for the tenant.
While a long-term apartment rental often includes conditions allowing the tenant to personalize the space, vacation rentals are meant for short stays without modifications to the property. This fundamental difference defines not only the type of contractual relationship but also the expectations of both parties regarding the care and use of the home.
Advantages of long-term rental for landlords on the Costa del Sol
For a property owner with a home on the vibrant Costa del Sol, choosing long-term rental can be a strategic decision full of benefits. Imagine the peace of mind of knowing your real estate investment is not only secure but also generating a steady return month after month.
The first major advantage is stability and consistent cash flow. Unlike the seasonal uncertainty of vacation rentals, a long-term tenant provides regular and predictable income, making financial planning easier and ensuring coverage of property-related expenses.
In addition to economic security, tenant turnover is significantly reduced. This directly translates into saving time and money. You avoid the recurring costs and efforts of finding new tenants, performing deep cleanings between short stays, and managing multiple check-ins and check-outs.
In general, tenants who consider a property their home tend to take better care of it, which means less wear and tear on the property. This rental model encourages a long-lasting, trustworthy relationship with the tenant and greatly simplifies overall management compared to the demands of short-term and tourist-style rentals.
Financial stability: Consistent and predictable income
Let’s dive deeper into the crown jewel for landlords: financial stability. A long-term rental contract means a reliable and consistent source of income. Take an apartment rented for €1,200 per month. That adds up to €14,400 annually (barring any issues), a clear figure you can plan around. No need to worry about the low season, empty weeks, or last-minute discounts to fill gaps.
Now compare this with vacation rentals. While you might earn more during peak season, you’ll also face periods of low or zero occupancy, platform commissions, constant cleaning and laundry expenses, and a higher time commitment for management. The fluctuation can be stressful and makes forecasting difficult. Long-term rental offers a level of financial peace of mind that’s hard to beat, allowing you to know with reasonable certainty how much your property will generate each year.
Cost reduction: Save time and money by not constantly searching for tenants
Every time a tenant leaves, an expensive cycle begins. You need to invest in advertising (real estate platforms, listings), spend time showing the property, carry out screening and background checks, sign new contracts, and often handle minor repairs or general touch-ups. These costs, both financial and time-related, add up quickly—especially when turnover is high, as is often the case with very short-term rentals.
Long-term rentals drastically reduce this turnover. A satisfied tenant may stay in the property for years, eliminating these recurring expenses. Of course, keeping the property in good condition is essential; a well-maintained home not only attracts quality tenants willing to stay, but also preserves the long-term value of your investment. It’s a virtuous cycle: you take care of the property, attract good tenants, they take care of it, and you enjoy stability and lower costs.
Advantages of long-term rental for tenants on the Costa del Sol
Now, let’s put ourselves in the shoes of someone looking for a rental in Estepona or elsewhere on the Costa del Sol. For a tenant, choosing a long-term rental on the Costa del Sol offers a range of significant advantages, starting with residential stability and security.
Knowing you have a place to call home for an extended period, without the uncertainty of having to move every few months, brings invaluable peace of mind. It allows you to plan your life, enroll children in school, integrate into the local community, and simply relax.
This rental model also offers notable flexibility compared to buying a property. There’s no need for the large upfront payment of a mortgage or the long-term financial commitments that come with it. Plus, it gives you the freedom to relocate if your personal or professional situation changes, without the complicated process of selling a home.
And even though it’s a rental, a long-term lease often allows for greater personalization of the space. With the landlord’s permission, you can paint walls, hang your favorite pictures, and truly make that long-term rental house or apartment your own haven. Lastly, renting can provide access to prime areas of the Costa del Sol, where purchasing might be prohibitively expensive.
Long-term rental contract: Legal aspects to consider
The long-term rental contract in Spain is subject to specific regulations that establish the rights and obligations of both parties. Under current legislation, the minimum duration to be considered a long-term rental is one year, although longer periods can be set initially.
A key point is that even if the contract is signed for one year, if neither party gives notice of termination at least one month in advance, it is automatically renewed on a yearly basis up to a maximum of five years (or seven years if the landlord is a legal entity).
The rights and obligations of both parties must be clearly specified in the contract. The landlord must ensure the tenant’s peaceful enjoyment of the property and carry out necessary repairs to maintain it in habitable condition, while the tenant must pay rent on time, take care of the property, and seek permission for any alterations.
Regarding the rent, during the first five years of the contract, it can only be updated annually based on the Consumer Price Index (CPI). The mandatory deposit is equivalent to one month’s rent, although it’s common to request additional guarantees, such as bank guarantees or rental insurance. The contract may be terminated early due to serious breaches of obligations, such as non-payment of rent or engaging in disruptive, unhealthy, or illegal activities in the property.
The Urban Leasing Law (LAU): Legal framework for renting in Spain
The Urban Leasing Law (LAU) is the cornerstone that regulates all residential rentals in Spain, including long-term rentals on the Costa del Sol. This regulation, whose most significant reform dates back to 2019, establishes a balance between tenant protection and landlord rights, ensuring legal security for both parties.
Among the most relevant aspects established by the LAU are the minimum contract duration and its extensions, the limits on rent increases, and the conditions for the return of the security deposit.
The law also covers special situations such as the sale of the property during the term of the contract (pre-emptive purchase rights) or the conditions for carrying out works in the home. Given the complexity of the regulations and their frequent updates, both Cabanillas Real Estate and other industry experts always recommend consulting with a lawyer specialized in real estate law before signing any long-term rental contract, especially for foreigners who may not be familiar with Spanish legislation.
Short-term vs. long-term rental: Which option is more profitable on the Costa del Sol?
The age-old question for many property owners on the Costa del Sol: Is short-term tourist rental or long-term residential rental more profitable? The answer isn’t one-size-fits-all and depends on several factors.
Short-term (vacation) rental has the potential to generate very high income during peak season, often exceeding the monthly rent of a traditional lease. However, this option comes with significantly higher expenses: platform commissions, constant cleaning and laundry, more frequent maintenance due to intensive use and turnover, and possible periods of low or no occupancy in the off-season.
On the other hand, long-term rental, while it may offer a lower monthly rent in nominal terms compared to vacation rental peaks, provides stable and predictable income throughout the year, with considerably lower management and maintenance costs, and much less time commitment from the owner.
Additionally, the risks associated with variable occupancy and potential damage from heavy use are reduced. The increasing regulation of tourist rentals in many areas of the Costa del Sol is also an important factor to consider, as it may involve licensing, specific taxes, and restrictions that do not apply to long-term residential rentals.
Factors to consider when choosing between short-term and long-term rental
Making the right decision between short-term and long-term rental requires an honest reflection on your own goals and circumstances. Here are some key factors to consider:
- Financial goals: Are you looking to maximize potential income while taking on more risk and management, or do you prefer stable, predictable income with less effort?
- Risk tolerance: Are you comfortable with the possibility of having the property vacant at times, or do you prefer the security of a stable tenant?
- Time available for management: Do you have the time and willingness to handle bookings, check-ins, frequent cleanings, and constant guest communication, or would you rather have a more passive management approach?
- Property location: Is it in a predominantly tourist area with high year-round vacation demand, or in a more residential area ideal for families or workers?
- Local regulations: Research the specific rules on vacation rentals in your municipality. Do they require a license? Are there restrictions? Additional taxes?
How Cabanillas Real Estate can help you with long-term rental on the Costa del Sol
Navigating the real estate market on the Costa del Sol can be complex, especially for those unfamiliar with local nuances. Cabanillas Real Estate offers landlords and tenants its extensive industry experience to streamline the entire long-term rental process. With over 50 years in the market, we fully understand the needs of both parties and work to create long-lasting, mutually beneficial relationships.
For landlords:
For landlords, the service includes a detailed market study to set a competitive price that maximizes profitability without compromising occupancy. The search and selection of tenants is carried out through a rigorous verification process that includes solvency checks, references, and personal interviews.
In addition, our real estate agency in Estepona handles the drafting and management of the long-term rental contract, offering advice on specific clauses tailored to each situation. Throughout the duration of the contract, Cabanillas Real Estate can act as an intermediary for maintenance management, coordinating repairs and monitoring the condition of the property through agreed periodic inspections.
For tenants:
Tenants benefit from an exclusive catalog of carefully selected properties that match their specific needs, saving them time on unproductive searches.
Our real estate agency in Estepona offers guidance during contract negotiations, clearly explaining each clause and condition—especially valuable for foreigners unfamiliar with Spanish legislation. This support continues throughout the duration of the rental, acting as an intermediary to resolve any issues that may arise.
Long-term rental, a smart option on the Costa del Sol
As we’ve seen, long-term rental on the Costa del Sol offers a solid set of advantages for both landlords and tenants. For landlords, it means financial stability, lower operating costs, and easier management. For tenants, it’s the chance to enjoy a stable and secure home in a privileged setting, with flexibility and the ability to personalize their space. It’s a rental model that encourages lasting relationships and contributes to vibrant community building.
Whether you’re looking for the peace of mind that comes with steady income from your property or dreaming of settling into life under the Andalusian sun, long-term rental is a smart and increasingly popular option. Given the importance of legal considerations and the dynamics of the local market, relying on experienced professionals is essential.
Get in touch with Cabanillas Real Estate today to find the perfect property or manage your long-term rental on the Costa del Sol. Our office is located at Avda. España 90, Estepona, Málaga. You can also follow us on our official social media channels like Facebook and Instagram, or contact us directly via WhatsApp at +34 667 155 033. We’re here to help turn your plans into reality.
Si tienes consultas puedes contactar en sales@cabanillasrealestate.com
