What does a holiday rental in Tenerife earn?
On stock Terrivio tracks, gross yield in Tenerife is typically 6–9% and net yield 3–5.5% after operating costs and purchase costs. The gap is the whole story: platform fees, cleaning, management, energy, insurance, community charges and local tourist tax often absorb 35–50% of gross revenue.
Worked example: a property at €265,000 let at €115 per night with 68% occupancy books about 248 nights and €28,520 of annual revenue (10.8% gross yield). After 24% variable costs and €3,800 of fixed costs, NOI is about €17,875 — 6% net on a total investment of €296,800.
Seasonality — do not annualise a peak week
Tenerife is one of the few European STR markets with genuine year-round demand: Northern Europeans in winter, Spanish and broader EU travellers in summer. Occupancy of 60–75% is realistic for licensed sea-view stock; inland villages are a different (weaker) curve.
Community (comunidad) fees on resort complexes can erase the yield advantage versus the mainland. Confirm tourist-use is allowed in the statutes, check whether the unit is already licensed, and stress-test occupancy at −10 points: winter demand is deep, but a noisy renovation next door or an airline-route cut shows up immediately in ADR.
Purchase costs and tax in Tenerife
Budget about 12% above the asking price for acquisition costs in Spain. Main item: ITP 6–10% (resale) · 10% VAT + 1.5% AJD (new-build). These costs are gone on day one — that is why Terrivio divides NOI by total investment, not by asking price.
Non-resident EU/EEA owners pay 19% on net rental income (costs deductible); non-EU owners 24% on gross. Annual IBI property tax and Plusvalía on resale apply.
Tourist tax: Catalonia & Balearics: ~€2–7 per night. Usually collected from guests, but it still sits inside your competitive nightly rate.
Short-term rental rules in Tenerife
Holiday lets need a vivienda vacacional licence via the Cabildo de Tenerife plus Spain's national single registry number (mandatory since July 2025). Some municipalities cap new licences or require a minimum stay. Unlicensed listings are actively fined — do not underwrite a deal on 'everyone rents anyway'.
Country overlay (Spain): A regional tourist licence (VUT/HUT) plus the national single registry number (mandatory since July 2025) are required. Barcelona is phasing out tourist flats by 2028; the Balearics and parts of Andalusia restrict new licences.
Popular towns include Costa Adeje, Los Cristianos, Puerto de la Cruz, Los Gigantes and Adeje. Each has a different seasonality and licence map — Terrivio scores regulation for the exact city on a listing analysis.
How to calculate yield in Tenerife
- Estimate annual revenue. Use a blended ADR and annual occupancy, not a peak-week rate. Booked nights = 365 × occupancy. Then revenue = ADR × booked nights.
- Subtract operating costs. Variable costs (platform, cleaning, management) plus fixed costs (insurance, utilities, community fees, maintenance). A starting point in Tenerife is 24% variable plus the fixed costs in the calculator.
- Add purchase costs to the price. Include transfer tax, notary, registry and agency — about 12% in Tenerife.
- Divide NOI by total investment. That is net yield. Compare it with your mortgage rate and with a long-term rental fallback before you bid.
Frequently asked questions
Is a holiday home in Tenerife a good investment in 2026?
It depends on licence, micro-location and whether you need the weeks yourself. Typical net yields are 3–5.5%. Always underwrite net, never gross, and never assume a peak-week rate runs 365 days.
How do I calculate rental yield in Tenerife?
Net yield = (annual revenue − variable costs − fixed costs) ÷ (purchase price + acquisition costs). Annual revenue is ADR × 365 × occupancy. The calculator on this page does that with Tenerife defaults.
What are purchase costs in Tenerife?
Plan about 12% of the price: ITP 6–10% (resale) · 10% VAT + 1.5% AJD (new-build), plus notary, registry and any agency fee.
Do I need a licence to let in Tenerife?
Holiday lets need a vivienda vacacional licence via the Cabildo de Tenerife plus Spain's national single registry number (mandatory since July 2025). Some municipalities cap new licences or require a minimum stay. Unlicensed listings are actively fined — do not underwrite a deal on 'everyone rents anyway'.