When you have a property to rent, the first thing you think about is: should I put it up for traditional rental, seasonal rental, or vacation rental?
If you are also asking yourself this question, this article may be of interest to you, as we will discuss the pros and cons of each modality so that you can choose which one best suits your needs.
Let’s see…
Traditional rental: the rental of a lifetime
You are already familiar with traditional renting; it consists of signing a contract with a tenant for a long period, who will use the property as their habitual residence.
In Spain, this type of rental is governed by the LAU (Urban Leasing Law) and stipulates that:
- The minimum duration of the contract must be 5 years.
- The rent is freely agreed between the two parties.
- The rent is updated each year according to the CPI or the IGC (if the contract was signed before 2023). If it is after this date, it has a maximum limit stipulated by the Government of 2.2%.
- The deposit can be a maximum of 1 month (although an additional guarantee of 1 more month can be requested).
- The landlord must take care of all repairs to the property, appliances and belongings found inside (if their deterioration occurs naturally)
Advantages of traditional rental
- You guarantee that your property is in use throughout the entire period
- You have stable and predictable income (as long as there are no defaults)
- Tenants rotate less
- You have a 60% deduction in the IRPF for renting a habitual residence
Disadvantages of traditional renting
In recent years, we have seen that the disadvantages of traditional renting in Spain are many:
Lower monthly rent: compared to holiday or seasonal rentals, which can even double, so there is a huge opportunity cost if you opt for this option.
Risk of non-payment: if a tenant stops paying and you want to execute a justified eviction, you will have to go to court and it can take at least 5 years (+3 additional years of extension and even 1 more if the tenant is declared vulnerable for it to become effective… In total 9 years!). Not to mention that the owner has to pay for water and electricity.
Wear and tear on the property: Contrary to popular belief, traditional rentals are the type that put the greatest strain on properties, as tenants spend a large part of their lives indoors and constantly use the appliances and fixtures they own.
Price control: from 2023 the Government imposes the maximum increase that can be applied to rent, which is usually below the CPI. What does this mean? That literally means you make less money every year for the same rent.
And, as a result of all this, fewer and fewer people are inclined to use this modality.
Especially when they understand that there are these other options that we will see below…
Seasonal rentals: less known but very profitable
Seasonal rentals are similar to traditional rentals, but with one exception: their duration must be greater than 1 month and less than 1 year.
Furthermore, it is characterized by:
- Existing contract: even if it is for a season, it also requires a contract
- Have a motivation: for example, a teacher who is displaced from his place of origin and needs to rent a property for 1 academic year. (And it must be stated in the contract).
- There is no automatic extension: when the period ends you can cancel it without any problems.
Advantages of seasonal rentals
Greater profitability: you can raise the price from time to time without being subject to CPI restrictions or price controls.
Alternative to holiday rentals: If a community of neighbours or a town hall does not allow holiday use of the property, you can always resort to seasonal rentals. They can’t forbid you.
It is not a classified activity: in some autonomous communities, such as the Canary Islands, if you want to offer your house for holiday rental, you must apply for a Classified Activity License.
What is a classified activity? These are those that may cause inconvenience to neighbours and require, in addition to the licence and payment of fees, a favourable technical report and foreseeable inspections in the future to ensure compliance.
Tenant stability: Unlike vacation rentals, which require you to constantly look for short-term reservations, here you can guarantee tenants for longer periods without having to constantly resort to platforms like Airbnb or Booking.com.
Lower risk of non-payment: this type of rental is designed for profiles such as teachers, who need the property for a very specific period of time, so in the event of non-payment (which rarely occurs because they are usually solvent) you can carry out an eviction more quickly.
Disadvantages of seasonal rentals
The contract must be well justified: if you have not specified the reason for the contract correctly, it is possible that for legal purposes it will be considered a traditional rental contract, with everything that this entails: automatic extension, risk of non-payment and impossibility of carrying out evictions, etc.
Less profitable than holiday rentals: It depends on the case and the area, but if demand is very high, holiday rentals are likely to exceed the monthly income you would get from seasonal rentals.
Less stability compared to traditional rentals: since the periods are shorter, you are not guaranteed to use the property for 5 years, but it is easy to find tenants through platforms such as Idealista or Fotocasa, which have the “seasonal” option.
Holiday rentals: very profitable but in some cases saturated
The main characteristic of holiday rentals is that they cannot be considered a regular home and instead of tenants, you now have guests.
Furthermore, in general, it is the most profitable modality of all, although it will depend on many factors:
- That the city council and the community of neighbors allow it
- That the demand in the area is high
- That the Government does not limit it (as has happened in New York and will happen in Barcelona from 2028).
But, in 2025, if you are in Andalusia, the Canary Islands or other tourist areas, it is still a very good option.
Advantages of vacation rentals
Higher profitability: as we said, the price per night is the highest of all, so there is no doubt about this. But you can also dynamically adjust prices using revenue management techniques. For example, if you know there will be a concert or festival on a certain date, you can increase your prices.
No contract required: as it is not governed by the LAU, it is not necessary to make a contract or request a deposit, considerably reducing bureaucracy and entry barriers.
Immediate (or almost immediate) evictions: For all intents and purposes, a vacation rental is almost like a hotel room. And what does this mean? That if a person stays longer than necessary, the police can be called to evict the house immediately. There are no trials or waiting times.
International clients: Using platforms such as Airbnb, Booking.com or VRBO you can access a huge number of potential guests who want to stay at your property.
Disadvantages of vacation rentals
Classified activity: as we mentioned before, in autonomous communities such as the Canary Islands, holiday rentals are considered an activity that may cause disturbances to neighbours, so it is necessary to obtain the corresponding licence to start operating.
More bureaucracy: did you know that from December 2024 it is mandatory to send guest data to the Ministry of the Interior? This is the case for each person (who must answer up to 42 questions!) and with each check-in within a maximum period of 24 hours, increasing the bureaucratic burden borne by the owners.
Legal uncertainty: we do not know if the New York model (which has required vacation rentals to have a minimum duration of 1 month) or Barcelona (which will supposedly eliminate it in 2028) will end up being imposed in the rest of Spain.
Operational complexity: you need a cleaning company, laundry, key delivery, customer service in several languages and 24/7, customer data management and sending to the Ministry of the Interior, repair of damaged items, etc. If you don’t want to live for your guests, it’s mandatory to hire a vacation rental agency to take care of everything.
What rental option are you going to choose?
Now that you have an overview of the pros and cons of each type of rental (traditional, seasonal and vacation), which one will you choose?
Actually, if you think about it, it doesn’t have to be just one, you can offer your property for a 9-month season, during the school term, and then as a vacation rental during the summer to maximize income…
The possibilities are endless!
The important thing is that you make an informed decision. So if you have any questions and want to find out how we do it at Home2Book, where we manage +500 homes in the Canary Islands and Andalusia, request information by filling out this form or calling us at +34 648 616 802.
We help you manage your property in the most efficient and profitable way possible.
We are waiting for you!
