Rental investment in Marbella: yields, VFT licence and taxation

The return on a rental investment depends first on the type of property and its location. A studio or two-bedroom flat in Nueva Andalucía or San Pedro de Alcántara, well positioned near shops and amenities, generally shows the highest gross yield relative to purchase price, since the entry ticket remains more accessible than in the most sought-after areas.

A high-end apartment on the Golden Mile or in Puerto Banús relies more on capital appreciation and prestige than on pure rental yield: prices per square metre are high, which mechanically compresses the percentage return even where absolute rents are comfortable. A villa with a pool in Benahavís or La Quinta lets well during high season to families or groups, but its annual occupancy is more irregular and maintenance costs (pool, garden, security) weigh more heavily on the net return.

These order-of-magnitude figures, to be checked case by case against the property's condition, build year and management quality, provide a reasonable basis for comparison for 2025-2026.

A long-term let (a standard residential lease, often for 11 months or one year) offers a stable, predictable income, with occupancy close to 100% outside vacancy periods between tenants. It requires little day-to-day management but caps the potential income, since monthly rents remain lower than the sum of holiday rents accumulated over a year in a sought-after area.

Seasonal holiday letting can generate higher gross income, particularly on the Golden Mile, in Puerto Banús or in Nueva Andalucía where summer demand is strong, but actual occupancy across the full year is markedly more uneven: very high from June to September, it drops sharply in winter outside specific events. An average annual occupancy of 45 to 65% is a realistic order of magnitude for a well-marketed property, to be checked against the area and the property's quality.

This option also involves significantly heavier management and turnover costs: cleaning between each stay, linen, guest check-in, reactive maintenance, which often justifies using a professional management company.

Net yield depends heavily on the costs deducted from gross rent. The main ones to anticipate are: letting management fees, typically between 15 and 25% of rent collected for an agency-managed holiday rental (often less for a directly managed long-term let); cleaning and linen between stays for holiday lets; community (copropriedad) charges; IBI, the annual property tax based on cadastral value; home and liability insurance; and, where applicable, depreciation of the property and furnishings, tax-deductible for residents of the European Union and the European Economic Area.

Other occasional items must be budgeted for: minor repairs, equipment replacement, booking-platform commission, and possibly the fees of a local accountant for the quarterly tax filing. Depending on the chosen formula, these costs together can represent between 25 and 45% of gross rent before tax, an order of magnitude to adjust according to the property and the service provider.

Any short-term holiday rental in Andalusia requires a VFT licence (Vivienda con Fines Turísticos), registered with the Andalusian tourism register. The owner receives a registration number that must appear on every listing, including on online booking platforms, or face penalties. The property must meet minimum equipment requirements: air conditioning or heating according to season, hot water, sufficient furnishings, a first-aid kit, and tourist information and emergency contact details available to guests.

A key point to watch concerns the homeowners' association's consent: since 2025, a community of owners can, by a qualified three-fifths majority vote, prohibit or restrict short-term holiday letting within the building, potentially including owners who already hold a VFT licence, depending on the bylaws adopted. Conditions for obtaining and maintaining the licence have also become stricter, with tighter checks on equipment compliance and the accuracy of declared information.

Finally, a national short-term rental register now sits alongside the Andalusian regional register, with a national registration number now required by the main platforms for any new listing. Before any purchase intended for holiday letting, it is essential to check the current community bylaws and the outcome of any recent community votes.

A non-resident owner receiving rental income in Spain must declare it via Modelo 210, the non-resident income tax (IRNR) form, in principle on a quarterly basis. The applicable rate depends on the owner's tax residence: residents of the European Union, Iceland and Norway are taxed at 19% on net income, that is after deducting costs directly linked to the letting (management, community charges, IBI, insurance, depreciation, mortgage interest where applicable). Residents outside the European Union and European Economic Area, notably British nationals post-Brexit or other non-EU residents, are taxed at 24% on gross income, with no deduction of costs allowed.

This difference in treatment makes the deductibility of costs particularly significant for European owners, and should lead non-European owners to factor this higher rate into their profitability calculations before buying. These rates and filing requirements change periodically and should be verified at the time of investment, particularly in the event of a change in tax residence or Brexit-related status.