Medium-term rentals (32 days to 11 months) bypass Spain's tourist rental licensing restrictions. Legal under the Arrendamientos Urbanos (LAU) law, they require written lease contracts, 1-2 months' deposit, are taxed as regular rental income, and offer 5-8% yields on Costa Blanca. This is the legal workaround for areas with tourist license moratoria.
Spain's cities have increasingly restricted tourist rental licenses (VT-licenses), creating a practical problem for property investors: how to generate rental income without tourist rental approval. The answer is medium-term rentals (rentals lasting 32 days to 11 months). This strategy falls under Spain's standard rental law (Ley de Arrendamientos Urbanos), not tourist rental regulations, making it legal even in areas where new tourist licenses are frozen. This comprehensive guide explains how medium-term rentals work, their legal framework, tax implications, pros and cons compared to tourist rentals, and realistic yields on the Costa Blanca.
Understanding Medium-Term Rentals in Spain
Legal Framework: The LAU Law for Medium-Term Rentals
How Medium-Term Rentals Work in Practice
Tax Treatment of Medium-Term Rental Income
Financial Reality: Yields & Returns
Pros & Cons: Medium-Term vs Other Strategies
Protecting Yourself: Legal & Practical Tips
Is Medium-Term Rental Right For You?
The Bottom Line
Medium-term rentals (32 days to 11 months) are a legal, practical alternative to tourist rentals in areas with licensing restrictions. Governed by standard rental law (LAU) rather than tourist regulations, they require only a written lease contract—no license, no government approval. Expected yields are modest (1-2% net), but combined with property appreciation and mortgage leverage, total returns can be competitive. The key to success is professional management (20-25% of rent), clear contracts, proper insurance, and realistic expectations. Medium-term rentals work best for long-term investors holding 5+ years in tourist-accessible locations. For non-Lucrative Visa holders or those needing immediate income, consider alternatives. Consult a tax advisor and property lawyer before investing—mediums-term rental regulations may change, and structuring matters for tax purposes.
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