Few subjects cause as much confusion among owners as long-term letting. Every week we read headlines about "the change that comes into force in September", and every week clients in Alicante and Benidorm call us asking what they can and cannot do. This guide separates three things: what is in force today (and binds you), what was passed and then fell (and no longer binds you) and what is being voted on this month (and does not bind you yet). With the figures you need to decide whether to let, how to let, or whether to sell.

1. What is in force: the LAU and Law 12/2023

The rules for renting out a main residence are still those of the Urban Leases Act (LAU), reinforced by Law 12/2023 on the right to housing. These are the ones that affect a private landlord in the province of Alicante:

  • Minimum term: 5 years if the landlord is an individual and 7 if it is a company. The tenant may leave after the sixth month with 30 days' notice; the landlord cannot terminate early (except for proven personal need, and only if stated in the contract). Afterwards, tacit annual renewal for up to 3 more years unless either party gives notice.
  • Rent updates: by the IRAV, the national statistics office (INE) index, in all contracts signed since 26 May 2023. The latest published figure is 2.49% (July 2026), after 2.44% in June and 2.47% in March. It applies once a year, on the contract anniversary, with at least one month's notice: a €1,000 rent becomes €1,024.90. Contracts signed before that date follow whatever they say, usually the CPI, which is around 3% in 2026.
  • Agency and contract fees: paid by the landlord. Since 2023 neither the agent's fee nor the cost of drafting the contract can be passed on to the tenant.
  • Deposit: one month's rent is compulsory (lodged with the regional government) plus, at most, two further months as additional guarantee (bank guarantee or deposit).
  • Minimum pre-contractual information and a written contract: property identification, energy certificate, rent, term, update mechanism and guarantees.

2. Stressed zones: the Valencian Community has declared none

Rent caps, the extraordinary 3-year extension at the tenant's request and the "large landlord" threshold of 5 homes are only activated in municipalities declared stressed residential market areas. Today they exist only in Catalonia, the Basque Country, Navarre and Galicia. Neither Alicante, nor Benidorm, nor any municipality in the Valencian Community is declared: the procedure started in 2023 for 83 municipalities (27 of them in the province of Alicante) was halted and the current regional government has not revived it. In practice, in our province the initial rent is freely set and extensions are the ordinary LAU ones.

3. What fell: Royal Decree-Law 8/2026

On 20 March 2026 the Government approved RDL 8/2026 with two emergency measures: a 2% cap on rent updates and an extraordinary extension of contracts, linked to the Persian Gulf crisis. Parliament rejected it on 28 April 2026 and it was in force for only 37 days. Since then, contracts extended during that period are governed by the ordinary LAU extensions and updates revert to the IRAV. If your tenant claims the emergency extension or the 2% cap, there is no longer a legal basis for it.

4. What is being voted on in September: the new housing decree

The Government is taking a more ambitious package to Parliament in September, with eleven measures: rent caps in stressed zones, tax incentives for landlords who lower rents, limits on seasonal and room rentals, longer extensions, suspension of evictions of vulnerable tenants until alternative housing is found, a levy on SOCIMIs and a higher tourist VAT. An estimated 630,000 contracts expire this year and almost four million people would be affected if it passes.

Approval is uncertain: the vote was postponed from July to September for lack of support, the PP rejects it, Junts warns it will vote it down if it intervenes in prices, Podemos makes its vote conditional and only Sumar wants it approved now. Our advice is clear: do not make decisions today based on a rule that does not exist. If it is ratified, we will tell you exactly what changes and from when.

5. Tax: the income-tax reductions you can actually apply

When declaring income from letting a main residence, the general reduction for contracts signed since 2024 is 50% (earlier contracts keep 60%). It rises to 60% if you carried out renovation works in the previous two years, to 70% if you let for the first time to tenants aged 18–35 in a stressed zone or to a public body or non-profit, and to 90% if you cut the rent by 5% in a stressed zone. In Alicante, with no stressed zones, the real reduction will be 50%, or 60% with works. Deductible: IBI, community fees, insurance, mortgage interest, repairs and 3% depreciation of the construction value. Non-residents pay 19% (EU/EEA) or 24% with fewer deductions.

6. The numbers in Alicante and Benidorm: let or sell

Rents are at record highs: €13.9/m² a month in Alicante city (August 2026, +7.3%) and €17.6/m² in Benidorm (July 2026, +5%). But sale prices have risen faster (Alicante €2,721/m², Benidorm €3,807/m², all-time highs), so gross yields have fallen to the 4.3%–5.4% band, before income tax, community fees, IBI, insurance and void periods. An 80 m² flat in central Alicante rents for about €1,150 a month and is worth about €290,000 today. Two honest conclusions:

  • If you are going to let, do it properly: a complete contract, the deposit lodged, rent-default insurance, rigorous tenant screening and the anti-squatting law as a safety net in case of non-payment.
  • If the flat gives you trouble, sits empty or the tenant is leaving, 2026 is an excellent year to sell: record prices, international demand and a buyer paying today what rent would take 20 years to return. If the flat is tenanted, remember the tenant's right of first refusal and that a sale does not end their contract. We can help you value it with a free online estimate and work out your net proceeds with the selling-costs calculator; non-resident owners should also read our guide to taxes when selling as a non-resident.

Related reading: holiday lets in Benidorm in 2026, investing on the Costa Blanca and selling your flat in Alicante.

Frequently asked questions

How much can I raise the rent in 2026?

In contracts signed since 26 May 2023 the annual increase is limited to the INE's IRAV index, whose latest figure is 2.49% (July 2026). Earlier contracts follow what was agreed, usually the CPI. The update can only be applied once a year, with one month's notice.

Does any rental change come into force in September 2026?

No new rule is in force. The Government is taking a decree with caps, extensions and an eviction moratorium to Parliament in September, but it has not been approved and ratification is uncertain. The previous decree (RDL 8/2026) was rejected on 28 April 2026 after 37 days.

Are Alicante or Benidorm stressed rental zones?

No. Only Catalonia, the Basque Country, Navarre and Galicia have declared stressed zones. There are none in the Valencian Community, so the initial rent is freely set and no caps or extraordinary extensions apply.

Who pays the agency fee on a long-term let in Spain?

Since Law 12/2023, the agency and contract-drafting costs for a main-residence tenancy are always paid by the landlord. They cannot be passed on to the tenant.