Long-Term Rentals on the Costa Blanca

Where LTR works best

LAU 2026 — the rules that matter

• ✦Minimum lease 5 years (7 if landlord is a company) — tenant has unilateral right to extend up to that point.
• ✦Annual rent indexation capped at the new Indice de Referencia (replacing IPC) — typically 2.0–3.5% in 2026.
• ✦Tenant deposit: 1 month rent, held by the regional housing agency.
• ✦Additional security deposit (1–2 months) permitted for unfurnished or higher-value properties.
• ✦Eviction for non-payment: 4–9 months with a competent procurator; mandatory mediation in 'tensioned zones'.
• ✦60% IRPF reduction on net rental income when let as habitual residence to a Spanish-tax-resident tenant.

Tenant selection — where deals succeed or fail

• ✦Always request: last 3 payslips, work contract, last tax return, bank statements (3 months), photocopied ID/NIE.
• ✦Run a Fichero de Inquilinos Morosos (FIM) check — €20, identifies tenants with prior eviction history.
• ✦For Spanish-resident tenants: nomina-to-rent ratio above 3.0× minimises default risk.
• ✦For foreign tenants: 6–12 months rent prepaid is common; alternative is bank guarantee ('aval bancario').
• ✦Rent-default insurance ('seguro de impago') costs ~3.5% of annual rent and covers up to 12 months unpaid rent + legal fees — almost always worth it.

Net cashflow modelling

Take gross rent. Subtract 4–8% vacancy (city) or 8–12% (mixed-season coast). Subtract 7–10% management fee if applicable. Subtract IBI, community fees, insurance (~€2,500 annual all-in for a typical apartment). Subtract maintenance reserve (5–8% of gross). Subtract Spanish tax.

Example: €1,100/month apartment in Alicante centre, 95% occupied, self-managed: gross €12,540, after costs and 19% tax (EU non-res, net basis) — around €8,400/year net. On €170k equity that's 4.9% net cash-on-cash, before any capital appreciation.