Vacation Rentals Are Taking Over Tenerife

The vacation rental market in Tenerife, especially in the south of the island, has changed quickly over the past few years. Popular destinations like Costa Adeje now have thousands of homes dedicated to short-term holiday lets. While this has created income opportunities for property owners, it has also led to challenges for long-term residents and renters.

Tenerife Rentals Now Outnumber Hotel Beds

As of early 2025, Tenerife accounts for around 41% of all registered vacation rental properties in the Canary Islands. That’s more than 20,000 homes being used as short-term rentals, offering a total of over 84,000 tourist beds, nearly the same number as all hotel beds available on the island. This marks a major shift in how the tourism sector uses housing.

Costa Adeje and Arona: Hotspots for Holiday Homes

In the south of Tenerife, the numbers are especially high. The municipality of Adeje, which includes Costa Adeje, has over 4,200 licensed holiday rentals, making up about 13% of all homes in the area.
Nearby Arona, which includes Los Cristianos and Playa de las Américas, has over 5,000 vacation rental properties. These southern municipalities are now among the most active holiday rental zones in all of Spain.

Vacation Rentals vs. Long-Term Housing in Tenerife

Since 2019, vacation rental supply has grown by nearly 30% in Tenerife. The island added close to 19,000 new beds, with much of the increase happening between 2023 and 2025. This sharp growth has outpaced the development of traditional hotels and put pressure on housing availability for local people.
One of the biggest impacts of this trend is the rising difficulty in finding Tenerife house rent options for long-term stays. As more homes are used for tourism, the stock of affordable rentals for locals continues to shrink. In Costa Adeje and other parts of the south, this has led to higher rents, fewer available apartments, and growing frustration among residents.

New Government Rules for Tenerife Vacation Rentals

In response, the Canary Islands government has proposed new rules that aim to control the growth of Tenerife rentals for tourists. These include limiting vacation rentals to 10% of all housing in a given area and allowing only properties that are at least 10 years old to qualify. Local councils would also have the power to decide which areas can or cannot be used for holiday rentals. The goal is to strike a balance between tourism income and local housing needs.

How the New Laws Could Impact Holiday Let Investors

Some experts believe these rules could lead to a drop in the number of holiday lets, especially in densely populated towns like Adeje and Arona. In some scenarios, the number of vacation rental properties could fall by 50% or more if the law is strictly applied. For those investing in Tenerife real estate, it’s a sign that the market may be entering a new phase—one where legal compliance and location become even more important than before.

Why Tenerife Real Estate Still Attracts Foreign Buyers

Despite the possible changes, interest in Tenerife properties remains high. The south of Tenerife offers sunny weather all year round, easy access to beaches, and strong tourist demand. Costa Adeje in particular continues to attract buyers from across Europe who are looking for investment homes or vacation getaways. For many of them, the ability to rent the property out—either short-term or long-term—remains an important part of their decision.

The Future of Rentals in Tenerife: Balancing Tourism and Local Needs

Looking forward, the key challenge will be to manage this growing interest in a way that supports both the local economy and the people who live and work on the island. As vacation rentals become more regulated, some investors may shift to long-term leasing or focus on high-quality, legal holiday homes. At the same time, renters will hopefully see more availability and slightly lower prices as the supply of housing becomes more balanced.

The Tenerife rentals market is still evolving. Whether you’re planning to invest, move to the island, or just rent a property in Costa Adeje, it’s more important than ever to stay informed, understand the rules, and be realistic about how the market is changing.