Complete Guide: Traditional Rental, Seasonal Rental, and Tourist Rental in Madrid 2025

Introduction to the rental landscape in Madrid

The real estate market in Madrid has experienced significant transformations in recent years. The Spanish capital has become one of the epicenters of housing demand, both for habitual residence and for temporary stays related to tourism or work. This reality has led to the diversification of rental modalities, each with its legal, fiscal, and practical particularities.

In the current context of 2025, it is essential for property owners to understand the differences between traditional rental, seasonal rental, and tourist rental, as the choice of one or another modality can have significant consequences both in profitability and legal security. This article comprehensively analyzes each type of lease, its advantages and disadvantages, as well as the specific requirements that must be met in Madrid.

Legal foundations applicable in 2025

The legal framework that regulates leases in Spain is mainly based on Law 29/1994, of November 24, on Urban Leases (LAU), with its subsequent modifications up to 2023. This regulation establishes the bases for the different types of leases, although it does not regulate all equally.

The LAU clearly differentiates between housing leases (traditional) and leases for use other than housing: seasonal. On the other hand, it expressly excludes tourist rentals from its scope of application, which are subject to the specific regulation of each autonomous community.

In Madrid, in addition to the LAU, Decree 79/2014 of the Community of Madrid (with its updates) applies, which regulates tourist apartments and homes for tourist use, as well as municipal ordinances related to land use and neighborhood coexistence. As supplementary law, we always find the Spanish Civil Code.

Traditional rental

Definition and essential characteristics

Traditional or housing rental is that which, according to Article 2 of the LAU, “falls on a habitable building whose primary purpose is to satisfy the permanent housing need of the tenant”. That is, it is the lease that aims to provide a stable home for the tenant.

This modality is strongly protected by legislation, which seeks to guarantee the housing stability of the tenant through various measures that limit the contractual freedom of the parties, especially the owner.

Formal requirements for the landlord

To formalize a traditional rental contract, the owner must:

1. Be the owner of the property or be authorized to rent.
2. Have the energy efficiency certificate.
3. Have the certificate of habitability or first occupation license.
4. Have the housing in adequate conditions of habitability.

There is no obligation to register in any specific registry, although it is advisable to register the contract in the Property Registry for greater legal security.

Duration and mandatory extensions

One of the most distinctive characteristics of traditional rental is its minimum duration established by law:

• If the landlord is a natural person: minimum duration of 5 years.
• If the landlord is a legal entity: minimum duration of 7 years.

This means that, even if a shorter duration is agreed, the tenant has the right to extend the contract annually until reaching these minimum terms. After this period, if neither party communicates their willingness not to renew with the established notice, the contract will be automatically extended for up to three additional years.

The landlord can only recover the housing before the minimum term if they need the housing for themselves or first-degree relatives, provided that it has been expressly stated in the contract and communicated at least two months in advance.

Seasonal rental

Definition and applicable legal framework

Seasonal rental is a modality contemplated in Article 3 of the LAU as “lease for use other than housing”. It is characterized by covering the non-permanent housing need of the tenant, usually linked to activities such as studies, temporary work, or any other transitory reason.

Unlike traditional rental, this modality is mainly governed by the will of the parties, with Title III of the LAU and the Civil Code applying supplementarily. This grants greater contractual freedom and less protection to the tenant.

Specific requirements for this modality

For a rental to be considered seasonal, it must:

1. Have a purpose other than satisfying the permanent housing need.
2. Be established on a temporary basis (although not necessarily brief).
3. Clearly reflect in the contract the temporary cause that motivates the lease.

It is essential to adequately document the temporary cause, since in case of judicial conflict, the landlord must prove that it is not a disguised habitual housing rental.

Duration and contractual particularities

One of the great advantages of seasonal rental is that it is not subject to the mandatory minimum terms of traditional rental. The parties can freely agree on the duration, without forced extensions. The contract will end when the agreed date arrives, without the need for prior notice.

However, it is important to clearly establish in the contract:

• The exact duration of the lease.
• The temporary cause that motivates it.
• The conditions of delivery and return of the property.
• The amount of rent (which is usually higher than traditional rental).

Tourist rental

Specific regulation in the Community of Madrid

Tourist rental is expressly excluded from the scope of application of the LAU according to its Article 5.e, being subject to sectoral tourism regulations. In Madrid, it is governed by Decree 79/2014 and its subsequent modifications, which regulate tourist apartments and homes for tourist use.

A home for tourist use is considered to be one that is temporarily ceded in its entirety, furnished and equipped for immediate use, marketed for profit in tourist offer channels, and that meets the requirements established in the regulations.

Necessary licenses and permits

To be able to allocate a home to tourist rental in Madrid in 2025, it is required:

1. Responsible declaration of start of activity before the General Directorate of Tourism
2. Registration number in the Register of Tourist Companies
3. Change of use license (in certain areas of Madrid)
4. Authorization from the community of owners if the statutes require it
5. Comply with municipal urban planning regulations

Since 2023, Madrid regulations have tightened the requirements for new tourist homes, especially in the city center, requiring independent access in many areas.

Technical requirements of the housing

The regulations require that homes for tourist use have:

1. Direct ventilation to the exterior or patio
2. Heating system in all rooms
3. First aid kit
4. Fire extinguisher
5. Evacuation plan
6. Complaint forms

In addition, a 24-hour attention phone must be provided for incidents related to the users’ stay.

Comparison of the three modalities

Duration and contractual stability

Traditional rental offers the greatest stability for the tenant, with a guaranteed minimum of 5 or 7 years depending on the type of landlord. In contrast, the owner has very limited ability to recover the housing during that period.

Seasonal rental allows freely agreeing on the duration, without forced extensions, which gives greater flexibility to the owner. The contract automatically expires upon reaching the agreed date.

Tourist rental represents the most flexible option, with stays that can range from days to weeks, allowing the owner to immediately recover possession after each reservation.

Protection for landlord vs. tenant

The balance of legal protection clearly tilts towards the tenant in traditional rental, while in seasonal rental there is a greater balance between the parties.

In tourist rental, the regulatory framework generally favors the owner, although it imposes more demanding administrative and technical requirements.

Tax considerations

Tax regime of traditional rental

In personal income tax, income obtained from traditional rental is declared as real estate capital income, with the right to deduct:

• Necessary expenses for obtaining income (community, property tax, insurance, etc.)
• Conservation and repair expenses.
• Depreciation of the property.
• A 50% reduction if the destination is the tenant’s habitual residence

The tax rate will depend on the corresponding bracket in the personal income tax scale.

Taxation in seasonal rental

Fiscally, seasonal rental follows the same regime as traditional, with a crucial difference: the 50% reduction does not apply as it does not constitute the tenant’s habitual residence.

This implies a significantly higher tax burden, which must be compensated with higher rents to maintain net profitability.

Taxation of tourist rental

Tourist rental has more complex fiscal implications:

1. If complementary services are provided (cleaning during the stay, breakfast, etc.), income is classified as income from economic activities.
2. Otherwise, they are considered real estate capital income, without the right to the 50% reduction.
3. Obligation to charge 10% VAT when services typical of the hotel industry are provided.

This modality usually bears a higher tax pressure, although it also presents greater opportunities for deducting associated expenses.

Comparative table of the three rental modalities

Conclusions

The rental landscape in Madrid in 2025 offers different alternatives, each with a distinct balance between profitability, legal security, and ability to recover the property.

Traditional rental remains the safest and most stable option, although with lower profitability and more difficulties in recovering possession. Legal protections for the tenant are maximum, which means greater security for the tenant but also more restrictions for the owner.

Seasonal rental represents an interesting balance, allowing higher rents and scheduled recovery of the property, without the administrative complexities of tourist rental. Its main challenge is to adequately document the temporary cause to avoid judicial reclassifications.

Tourist rental, for its part, maximizes potential profitability at the cost of greater administrative complexity, more demanding technical requirements, and more intensive management. Recent jurisprudence on utility cuts favors owners in this modality, although it remains the one that requires the most dedication.

The final choice will depend on the particular circumstances of each owner, the location and characteristics of the property, and short and medium-term financial objectives.

FAQs about renting in Madrid

1. Can an owner convert a traditional rental into a tourist rental at the end of the contract?
   Yes, at the end of a traditional rental contract, the owner can allocate the housing to tourist rental, as long as they obtain all the necessary licenses and permits according to current Madrid regulations. However, they must take into account possible urban planning restrictions in certain areas of Madrid.
2. Is it legal to establish a seasonal contract for students during the academic year?
   Yes, rental for students during the academic period is one of the typical cases of seasonal rental, as long as the link with the academic course and its determined duration is clearly established in the contract.
3. What consequences does it have for the owner if a judge reclassifies a seasonal contract as traditional?
   If a judge determines that a contract classified as “seasonal” is actually a habitual housing rental, the consequences include: application of the legal minimum duration (5-7 years), impossibility of evicting the tenant until fulfilling said term, and possible administrative sanctions for fraud of law.
4. Can I cut off utilities to a tenant who does not leave my apartment after the end of a seasonal contract?
   According to the recent ruling of the Provincial Court of Barcelona, utilities can be cut off to squatters. That is, those “tenants” who enter to occupy an empty home, in the case of usurpation, or a property in which a person resides, in the case of trespassing. It would not be applicable to cases of “tenant-squatters”, those tenants who stopped paying the rent.
5. How does the 2023 regulation on stressed areas affect the different types of rental in Madrid?
   The regulation on stressed areas mainly affects traditional rental, limiting rent increases in new contracts on properties that were previously rented. It has no direct impact on seasonal or tourist rentals, although indirectly it may favor these modalities as they are not subject to price control.

However, Madrid, for now, is not considered a stressed area.