A number of factors have colluded to make the Spanish real estate market a challenging one – for locals. Many, especially younger people, are being priced out of a market where shortage of housing stock is a serious problem that restricts the choice of properties in many locations as well as driving both rental and purchase prices beyond the means of a large percentage of the population.

Many can’t get on to the property ladder and live with their parents well into their thirties. This shortage of homes is due to a number of factors:

• The scarcity of affordable housing built over the past 30 years
• The influx of immigrants (500.000 – 1.000.000 per year since the turn of the century)
• The presence of foreign buyers that account for up to 15% of all property purchases in Spain and whose greater economic power helps to push prices up
• The acquisition of a large number of properties by private individuals and funds for use as short term holiday rental accommodation

The lack of action on the part of authorities over the past two decades – for instance in the form of proper residential/rental zoning restrictions – has allowed the situation to get out of hand. Now rental prices have also risen to a level where local residents and foreign workers can no longer compete, and prices have risen to the point where apartments are shared between different individuals and sometimes even couples or families.

In an attempt to deal with this situation, as well as the occupation of homes by so-called ‘okupas’ in the wake of the financial crisis of 2008, the authorities both regional and national have enacted a series of laws and regulations that protect homeowners by streamlining and speeding up the process of evicting illegal occupants, while on the other hand making the management of holiday rental homes more complicated.

Besides having to request a tourist license that allows them to rent out their home to tourists for short stays, homeowners will also have to meet official requirements in terms of the equipping of the property, provide accounts and deal with the possibility that the community of owners votes against short stay guests and bans holiday rentals altogether. 

All of this makes it increasingly difficult and labour intensive to rent out your property yourself, especially if you live abroad and can’t always stay up to date with Spanish and regional Andalusian regulations, and for this reason a growing number of homeowner are turning to professional companies that the know-how, resources and dedicated operational setup to navigate the process securely as well as offering safe vetting of guests, collecting and returning of deposits, effective channel marketing, cleaning, maintenance and concierge services, as well as property inspections, furniture replacements and much more, all aimed at providing a five-star service to guests and optimal returns combined with convenience for homeowners.

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The latest ruling is a modification of the existing Horizontal Property Law, which sets out the regulations regarding apartment blocks and residential community relations. According to the new law, an owner of a property in an apartment complex can only use it for holiday rentals if at least 60% of owners (in number and/or their ownership shares) vote to allow short-term lets within the community. Those who continue to rent out their properties to tourists in urbanisations that have voted against it can face legal action.

After April 3^rd 2025

People who managed to obtain the required tourist license before 3^rd April 2025 are exempt from the new ruling, but it applies to everybody else. In another twist, communities are also empowered to raise the community fees of properties being rented to tourists by up to 20%, a measure introduced as a levy on the extra ‘wear and tear’ on communal facilities such as lifts, swimming pools, etc.

The measures don’t affect long-term rentals, but it stands to reason that those properties with an existing tourist license have risen in value relative to those that don’t have it, as well as that homeowners keen on renting out their holiday homes for short-term lets are facing an increasingly difficult regime. The likes of Airbnb and Booking.com, for instance, will have to show official property identifiers on all their listings, or be removed within 48 hours.

The new law therefore makes holiday rentals more cumbersome for private owners, pushing investors towards aparthotels, buying apartments with an existing tourist license and/or within a residential community with resort amenities that is operated by a specialist company such as Esenzia, which besides taking care of all the required licenses and documentation also manages the community. Esenzia advises developers on how to create the best structure for communities of owners and also provides a professional reception, concierge and property and rental management service that allows for a smooth, professional operation with no negative impact for residents.

“Our staff is on-site to manage amenities such as the spa, gym, reception, swimming pool areas and also restaurants and coworking spaces. We do this for residents and guests, and we’re also there to receive arriving visitors, vet potential rentals beforehand and also ensure that the community’s rules are adhered to – by homeowners as well as their guests,” says Carmen Román, Operations Manager for Esenzia at Ayana, one of the residential resorts it operates. 

In this way, property owners maintain the chance of earning a return on their holiday home if they don’t live there permanently and also don’t miss out on the fact that homes with a tourist license tend to be worth 15-25% more. “It works for all involved, is managed transparently and professionally, and offers a win-win solution to what is an increasingly difficult situation for private homeowner looking to earn income through short-term holiday rentals.”

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New Legislation

The Spanish government has now (finally) introduced significant amendments to the Criminal Procedure Act to address the squatting issue more effectively, resulting in the following 

• Fast-Track Evictions – the new law, approved on December 19, 2024, introduces a “fast trial” process for cases of trespassing (allanamiento de morada) and property usurpation (usurpación de vivienda). This reform aims to resolve such cases within approximately 15 days, a substantial improvement over the previous average timeframe of two years

• Judicial Efficiency – by streamlining procedures related to illegal occupations, the reform enhances the efficiency of the Public Justice Service, ensuring swifter resolutions for property owners
• Legal Framework – the expedited eviction process is governed by the Civil Procedure Law (LEC), whose latest revisions specifically address illegal property occupations

A notable aspect of the reform is its approach to cases involving squatters with dependent minors. Previously, economic vulnerability or the presence of children could significantly delay eviction processes, in many cases resulting in occupants being granted ‘squatters rights’ until the youngest minor reached the age of 18. Under the new law, such factors no longer impede the expedited eviction process, which must be resolved within a maximum of 15 days.

Moreover, the  ‘48-hour rule’ ensures swift action once property owners report an illegal occupation. The new law gives the police authority to evict squatters without a court order. This underscores the importance of prompt action upon discovering unauthorised occupants and helps to avoid a ‘fait-accompli’ situation after which it used to be more difficult to ensure evictions.

Implications for Property Owners

After years of disequilibrium, the new legislative changes represent a significant shift in favour of property owners, providing them with more robust tools to combat illegal occupation. By reducing the legal complexities and timeframes previously associated with eviction processes, the reforms aim to deter squatting and protect property rights more effectively.​

Spain’s new anti-squatter laws mark a pivotal development in addressing the challenges posed by illegal property occupations. Property owners are encouraged to stay informed about these changes and take prompt action if faced with illegal occupants, but at long last the law now protects the rights of property owners in Spain – also making long-term lets more attractive, as even legal tenants could previously not be evicted if they stopped paying rent. The new legislation makes it possible to turn off utilities until the outstanding rent is paid or the tenants leave, thus marking a welcome new environment for homeowners and investors.

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Renting out a holiday home on the Costa del Sol can be lucrative. There is a lot of demand for quality holiday rental properties, but it comes with a set of legal requirements that owners who let out private homes must adhere to. Understanding these regulations is crucial to avoiding problems with the authorities and ensuring a smooth and financially rewarding rental operation. 

Registration and Licensing

The first step required is to have your accountant or lawyer check that your property has a Licencia Turística (a tourist licence that allows you to rent it out commercially). If not, they can check if one can be applied for and obtained, and as such a document adds value to your property it is a good idea to get one.

The next step is to register the property with the Registro de Turismo de Andalucía (RTA). This registration is mandatory and applies to all types of holiday rentals, including apartments, villas, and houses, and paves the way for the fully legal renting out and promoting of your holiday home. Once registered, it will be assigned a unique registration number that must be included in all promotional material and advertisements, as this reference number certifies that your property complies with local regulations.

Property Standards

With the paperwork sorted, you have to prepare the property itself. Regional Andalusian law sets out specific standards that holiday rentals must meet. These include providing air conditioning if the home is rented out during the hot summer months, heating for the winter, and adequate ventilation in all rooms. Additionally, properties must be fully furnished and equipped with essential items such as kitchenware, bedding and cleaning supplies. Safety features such as fire extinguishers and smoke detectors are also required, as are free WIFI and information about the property (including appliance manuals) and the surrounding area.

Contracts and Insurance

Property owners must provide guests with a formal rental agreement, which outlines the terms of the stay, including check-in and check-out times, house rules, payment and cancellation policies. It is  also advisable to have comprehensive insurance that covers any potential damage to the property or injury to guests, as well as to take security deposits that are returned once the property passes inspection after renting out.

Taxes and Legal Compliance

Holiday rental income is subject to Spanish income tax, and owners must declare this income in their tax returns. Additionally, non-resident owners may be subject to specific tax obligations in Spain. It is recommended to consult with a local tax advisor to ensure full compliance with all tax laws, and adhering to these legal requirements not only ensures compliance but also enhances the credibility and attractiveness of your holiday rental in Andalucía, ensuring you can market it with full confidence.

Making it successful

Any undertaking that involves making income should be structured and managed as a business – in a professional manner. Approach it this way and you will maximise your income and minimise the possibility of damage or problems. When it comes to maximising your income, a simple base formula exists that also applies to the hotel industry, which is: optimal ADR (Average Daily Rate) x optimal occupancy levels = optimal income.

That is to say, if you can achieve the highest possible price level for the renting out of your property (within its category) and also the highest possible level of occupancy during those weeks/months that it is available for rent, you will maximise your income potential. Making this happen depends upon three main factors:

1. Offering an attractive property for rent in an attractive location
2. Good marketing
3. High quality service that produces repeat business

Optimal security is provided by professional management – usually by a specialist company dedicated to this sector – and it takes the form of vetting clients carefully, having the right kind of insurance coverage, taking deposits and inspecting the property thoroughly before deposits are returned. This is a hands-on job best left to specialised professionals.

Preparation

As with all solid business enterprises, it pays to be well-informed and to know the market you’re in. Preparation is therefore an important part of the process, and it usually begins with an analysis of the market and understanding of the competition. This indicates the strength of the market, seasonal variations and opportunities, provides inspiration and ideas from what others are doing and 

High-low season and how it affects Marbella rental earnings

One of the most important things to do when you put your property on the holiday rental market is setting the right price – and understanding how the seasonal variations work. To determine the ADR, you have to bear two things in mind: 1) the seasonal variations, and 2) how your property compares with other similar ones. In other words, to compete successfully you will not want to set your price much above those of similar alternatives, while also not wanting to drop too far below.

Remember that optimal income from holiday rentals comes from the combination of two factors: a good rate and optimal occupancy. Combined they produce the best returns, so when the price is just right and your location and marketing are good, you will also enjoy high occupancy.

Benchmarking

Studying the price of nearby and similar spec properties is a research exercise called benchmarking, and it will give you a clear idea of the pricing range within which you can work. Firstly, compare your property with similar ones in the broader area, and see what they charge, then do the same with regard to properties in your location, focusing on similar ones.

Once you know what a same spec holiday home in your area goes for, you’re ready to set your price, but now you also have to bear the seasonal variations in mind. Different destinations have different high and low seasons. For ski resorts winter is high, summer low – for beach resorts like the Costa del Sol it is the other way around, for city destinations the variation tends to be lower, and in areas with attractions such as golf it runs from September to May.

Knowing when there are holidays and school holidays in your main markets also helps to adjust prices effectively. For a Marbella property July to September is the absolute high summer season, and the rest of the year lower season, as there no longer is a ‘dead’ part of year. Within the lower season, the periods closer to summer (September and May-June) enjoy a mid-level, and there are also seasonal holiday-based peaks such as Christmas and Easter to bear in mind, as well as the fact that you may have to offer some incentives in January and February.

With the above and a good marketing strategy, you’re ready to tap into a strong market.

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