You own a flat in the Canary Islands and want to make it work for you. The first question is inevitable: should I list it on Airbnb or find a long-term tenant? It is the decision that causes the most headaches among Canarian landlords, and there is no universal answer. It depends on your circumstances, your property, your risk tolerance and, above all, how much time and energy you are willing to invest.

In this article we break down both models with real data from the Canarian market, without idealising either one. And at the end, we present a third option that more and more landlords are choosing.

Holiday rental in the Canary Islands: the promise of high returns

Holiday rental has an appeal that is hard to ignore. The Canary Islands welcome over 16 million tourists a year, with much milder seasonality than mainland Spain. While holiday flats in Malaga or Barcelona empty out in winter, demand on the islands remains reasonably stable all year round thanks to the climate.

How much can you really earn?

The gross figures are tempting. A well-located two-bedroom apartment in Las Palmas de Gran Canaria or the south of Tenerife can generate between 1,800 and 3,500 euros per month in high season, and between 1,000 and 2,000 in low season. On paper, that comfortably exceeds what you would get from a traditional tenant.

But the gross figures are misleading. To reach the real profit you need to subtract:

Platform fees: Airbnb charges the host between 3% and 5% (plus what it charges the guest). Booking typically takes 15% directly.
Cleaning between guests: Between 40 and 80 euros per turnover, depending on the size of the flat. With average occupancy and short stays, that can mean 8-12 cleans per month.
Utilities and consumables: Electricity, water, internet, cleaning products, bed linen, towels, amenities. All at your expense.
Accelerated wear and tear: A holiday flat suffers much greater wear than a residential one. Appliances, furniture, paintwork — everything deteriorates faster with the constant rotation of guests.
Accountancy and tax advice: The taxation of holiday rental is different and more complex. You will need an adviser to handle your accounts.

When you subtract all these costs, the net profitability of holiday rental is typically 15% to 35% below gross income. It remains attractive in many cases, but the gap compared to long-term letting is no longer the chasm it first appeared.

Management: the factor nobody calculates

This is where many landlords come unstuck. Managing a holiday rental is, in practice, running a small hospitality business. It involves:

Responding to messages from potential guests (sometimes at 11pm or 6am).
Coordinating check-ins and check-outs, often with flights arriving at impossible hours.
Handling incidents during the stay: from a dripping tap to a neighbour complaining about noise.
Keeping the listing optimised, photos updated, prices adjusted to demand.
Managing negative reviews, which can tank your ranking on the platform.

Some landlords hire holiday management companies, but these typically charge between 20% and 30% of income. That significantly reduces the financial advantage over long-term letting.

The legal framework: the VV licence

In the Canary Islands, holiday rental is regulated by Decree 113/2015, amended by Decree 17/2023. To rent your flat to tourists you need a holiday dwelling licence (VV — vivienda vacacional) and must meet a series of requirements:

The property must be on land zoned for tourism or residential use (with nuances depending on each island and municipality).
You need a valid habitability certificate.
You must register the property with the Canary Islands Tourism Registry.
There are reporting obligations to the police (communication of traveller data).
Some homeowner associations have expressly voted to prohibit holiday use in their buildings, and that is binding.

Obtaining the VV licence can take months, and requirements vary significantly between islands. In some municipalities of Tenerife and Gran Canaria there are moratoriums or severe restrictions limiting new licences. If your flat has no licence and you list it on platforms, you face fines of between 2,000 and 40,000 euros.

Long-term letting: peace of mind has a price

The traditional model is simple: you find a tenant, sign a contract under the LAU (Ley de Arrendamientos Urbanos — Spain’s Urban Tenancy Act), and collect a fixed monthly rent for years.

Profitability: lower but predictable

A two-bedroom flat in Las Palmas or Santa Cruz de Tenerife currently rents for between 750 and 1,200 euros per month, depending on the area and condition. In tourist areas in the south, prices can be somewhat higher.

The great advantage is predictability. You know exactly how much you will collect each month, and your costs as a landlord are limited to IBI (Impuesto sobre Bienes Inmuebles — local property tax), community fees, insurance and structural repairs. The tenant pays the utilities.

Real advantages of long-term letting

Minimal management: Once the contract is signed, your involvement is reduced to collecting the monthly payment and dealing with occasional repairs.
Favourable taxation: Letting as a primary residence allows a 50% to 90% reduction on IRPF (Impuesto sobre la Renta de las Personas Fisicas — personal income tax) on net rental income (depending on the circumstances), a benefit that does not exist for holiday rental. You can find the full details in our guide to rental taxes in the Canary Islands.
Less wear and tear: A tenant who lives in the flat treats it differently from a tourist staying five nights.
No special licence: You do not need any tourism permit to let your flat as a primary residence.

The risks that do exist

Not everything is perfect with long-term letting. The main risks are:

Non-payment: This is every landlord’s number one fear. An eviction process in Spain can take between 6 and 18 months. A rent guarantee insurance policy mitigates this risk, but does not eliminate it.
Problem tenant: Noise, damage to the flat, conflicts with neighbours. A bad tenant can turn your investment into a nightmare.
Contractual rigidity: The LAU protects the tenant. The minimum mandatory duration is 5 years (or 7 if the landlord is a legal entity), and rent increases are limited. If you need to recover the property, your legal options are restricted.
Void periods between tenants: When a tenant leaves, it can take weeks or months to find another. During that period, the property generates nothing but still costs money.

Head-to-head comparison: numbers on the table

Let us take an example with a three-bedroom flat in Las Palmas, Guanarteme area:

Item	Holiday rental	Long-term letting
Gross monthly income	2,800 euros (annual average)	1,100 euros
Management and platform costs	-560 euros	0 euros
Utilities	-180 euros	0 euros (tenant pays)
Cleaning and maintenance	-350 euros	-50 euros
Net monthly profit	~1,710 euros	~1,050 euros
Hours of work per month	20-30h	1-2h
Void risk	Medium (seasonality)	Low (long contracts)
Licence required	Yes (VV)	No
IRPF tax reduction	No	Yes (50-90%)

If you apply the long-term tax reduction, the real after-tax difference narrows even further — we have broken down the real profitability figures by rental model in the Canary Islands in another article. And if you value your time at a reasonable rate, the 20-30 hours per month the holiday model demands carry an opportunity cost that is rarely calculated.

The hybrid model: room-by-room rental as a middle ground

There is a third option that combines aspects of both models and is gaining traction in the Canary Islands: renting by the room for medium-term stays (1 to 6 months).

This model works especially well on the islands because:

The Canary Islands attract a very specific profile: digital nomads, professionals on temporary assignments, international students, relocated workers. They all need stays of weeks or months, not single nights or five-year contracts.
No VV licence required: Room-by-room rental is governed by the Civil Code, not by tourism regulations. You do not need a holiday dwelling licence.
Higher profitability per square metre: By renting individual rooms instead of the whole flat, total income exceeds what you would get from a single long-term tenant. A three-bedroom flat can generate between 1,400 and 2,100 euros per month, compared to 1,000-1,200 for a whole-flat rental.
Lower risk of prolonged non-payment: Shorter stays and upfront collection significantly reduce the risk of accumulating months of unpaid rent.

The drawback is management. Renting by the room involves more turnover, more contracts, more coordination and more maintenance than traditional letting. Managing it yourself is feasible if you have the time, but many landlords prefer not to.

The delegation option: rent-to-rent

This is where the rent-to-rent model comes in. Instead of managing the rooms yourself, a professional company rents your entire flat at a guaranteed fixed monthly price and handles all the management: tenant selection, contracts, maintenance, cleaning, incidents.

You get paid every month regardless of occupancy. The risk of voids and non-payment is borne by the company. And your property is professionally maintained with cleaning and preventive maintenance protocols.

It is a model that does not maximise gross profitability (for that you would need to manage the holiday rental yourself), but it does maximise risk-adjusted and time-adjusted returns. For many Canarian landlords, that combination of peace of mind and predictable income is exactly what they need.

So which is best?

There is no single answer. Holiday rental suits you if you have time, enjoy active management, your flat has a VV licence and is in a zone with strong tourist demand. Long-term letting suits you if you prioritise absolute peace of mind and tax stability, even if you sacrifice some profitability.

And if you want higher returns than long-term letting but without the workload of holiday rental, professionally managed room-by-room letting is an alternative worth exploring. It is the middle ground that many Canarian landlords have been looking for without realising it.

If you want to find out how much your flat could generate with a professional management model, at Looping Rooms we work with landlords across the Canary Islands. You can request a no-obligation valuation and make your decision with real numbers on the table.

Holiday Rental vs Long-Term Letting in the Canary Islands: What's Best for Landlords?