Many buyers dream of owning a home in Spain and letting it out to cover the costs. It sounds simple. Buy a place in the sun, let it when you are not using it, and enjoy passive income. But there is a lot to consider before you hand over the keys to a paying guest.

If you are thinking of renting out your property in Spain in 2025, here is what you need to know about the rules, the returns, and a few lessons I have learned along the way.

1. Know the Difference Between Short and Long-Term Lets

Spain treats short-term and long-term rentals very differently. Short-term lets are often holiday rentals and fall under stricter regional rules. Long-term lets, usually six months or more, are more stable but generate lower income.

Short-term rentals can bring in higher earnings, especially in tourist hotspots, but they come with more responsibilities, paperwork, and potential restrictions.

2. Licensing Rules Vary by Region

This is the part that trips up a lot of new landlords. Every autonomous region in Spain sets its own rules for holiday lets. Some require a tourist rental licence, others limit the number of holiday rentals in each area.

In places like Barcelona, Mallorca, or Valencia, you cannot simply list a property on Airbnb without checking local laws. Getting the correct licence may involve inspections, paperwork in Spanish, and compliance with local housing standards.

In some areas, licences are no longer being issued, so you will need to buy a property that already holds one.

3. Taxes on Rental Income

Yes, you will need to pay tax on your rental income — even if you live in the UK. Non-residents from the UK currently pay 24 percent tax on gross income, with no deductions for expenses. EU residents can deduct allowable costs.

Make sure you speak to a tax advisor who understands both Spanish and UK tax law. Late payments or incorrect filings can lead to fines.

4. Typical Rental Yields in Spain

Rental yields in Spain vary widely. In cities like Valencia or Seville, long-term lets can return 4 to 6 percent annually. In coastal areas like the Costa del Sol or Costa Blanca, short-term yields can be even higher during peak season.

However, do not rely on summer bookings alone. Factor in low season, maintenance costs, and occasional vacancy periods.

5. What I Wish I Knew

I wish I had known just how much admin is involved in managing a rental from abroad. From guest communication to emergency repairs, it is far from hands-off. Using a reliable local property manager can make all the difference.

I also wish I had budgeted properly for the initial setup. Furnishing a rental property to meet guest expectations takes time and money. Wi-Fi, air conditioning, blackout blinds — all those little extras matter.

Renting out a property in Spain can be a rewarding income stream if done correctly. The key is to treat it like a business from the start. Know the rules, do the numbers, and get help where you need it. It is not passive, but it is possible.