Spanish Villa, to rent or sell

[Quattromaster]

Apologies if wrong category, please feel free to move if needed.


I have found myself the lucky owner of a villa in Spain, in Rojales about 30 mins south of Alicante, 3 bed, 2 bathroom detached, with a pool and off street parking approx 10 mins to beach, and 5 mins to nearest town.

The villa itself is in good condition, slightly dated kitchen/bathrooms, but everything in great condition, clean and works. Fully furnished at moment.

Toying with the idea of renting it out, but undecided if for short term holiday lets, or long term.

So, any of the the PH massive have overseas property, particularly Spain, that they rent out, what are the "pros and cons"

I know I'll need a license, which sort depends on length of rent.

But any other pointers gratefully received.

Thanks

[Chris Stott]

Your options depend on the area and if you have any restrictions on license type.

Here on the Costa del Sol, you can rent most 'holiday' properties long term as they usually within commuting range of the major towns where people work.

However, you can also usually get a similar annual income just doing short term holiday rents during peaks periods.

For example, an apartment that rents for €2,500/month on a long term, would fetch close to that a week during July, August, September, and a decent weekly fees at Easter and half terms.

With long terms you need to make sure your renters are fully vetted as Spanish law is overly protective of renters... it's not unknown for people to pay the deposit and first month rent, move in, and not pay another penny... and still be in the property years afterwards. Meanwhile, the owner is legally responsible for paying for the utilities and can be prosecuted for disconnecting them. The laws are gradually changing, but they are still a minefield for owners.

The laws and high holiday rent income are the 2 main reasons for the rapid rise in rental prices for the Spanish and it's become a huge political issue... rents have doubled or tripled in some areas in just a few years, pricing Spanish families and the young out of the market.

Be aware that the laws changed for short term lettings last year and if you're part of a community you now need their permission before you can apply for a license that allows you to use ABB or Booking.com... most communities have used this to stop any further licenses of this type.

Doesn't stop you renting long term, or holiday lets through more typical agencies, but you'll not be able to use the direct booking companies.

[Quattromaster]

Thanks for pointers Chris.

I had been warned about renting long term by a pal who has property in southern Spain, what you describe happened to him pretty much word for word.

I could sell it now, but would have 80-90k euro taxes to pay. Wait a while and have none. Hence looking to rent.

[Armitage.Shanks]

Quattromaster said:

Thanks for pointers Chris.

I had been warned about renting long term by a pal who has property in southern Spain, what you describe happened to him pretty much word for word.

I could sell it now, but would have 80-90k euro taxes to pay. Wait a while and have none. Hence looking to rent.

Out of interest if you 'wait a while' how does that null any property tax?

I've usually rented short term for when I want to go but last year the UK owner of the place I used sold up. He offered me the property but too late for me to give it due consideration and a Spanish chap bought it in the first week! This year I Air BnB a nice apartment for a reasonable amount and it's changed my perspective of whether I want to tie up money in buying a place especially with the 90/180 day rule. Equally if it was my place I wouldn't want to rent it to people I didn't know so would have to cover the bills. We've still a few ties in the UK but I don't see it being a full time place to remain but not ready to jump in to buy, and having seen more of southern France my head has been turned. I've still got in my head that buying a places fixes me to one location whereas Air BnB allows me to try anywhere.

[Chris Stott]

Quattromaster said:

Thanks for pointers Chris.

I had been warned about renting long term by a pal who has property in southern Spain, what you describe happened to him pretty much word for word.

I could sell it now, but would have 80-90k euro taxes to pay. Wait a while and have none. Hence looking to rent.

Assume the tax is CGT... I think you can only avoid it if it's your primary residence, you're a Spanish tax resident and you're over retirement age.

Probably not a bad time to sell as there's a lot of talk about the Spanish property market being at, or maybe past its peak for a while... there's massive amounts of construction and interest rates are rising.

Edited by Chris Stott on Monday 27th July 07:17

[Opapayer]

My ex does a lot of holiday rentals, both her own and for others. I can’t help with the legal side in Spain as based in another EU country, but never as simple as it looks on paper. Purely from an income perspective you’ve got to factor in breakages, cancelled bookings (that you might not be able to replace easily), big utilities bills (tourists love a/c set at 16 on 24/7), servicing of items, cleans between guests, issues while guests are there, complaints (often over the most irrelevant things). On the latter we’ve had complaints over there being bugs in the swimming pool, spiders on the island and other daft things. You’ll also be dealing with multiple nationalities, many of who, expect you to speak their language, not English.

Any income earned is taxable.

It’s a surprisingly time heavy commitment to do short term holiday lets.

Quattromaster said:

Thanks for pointers Chris.

I had been warned about renting long term by a pal who has property in southern Spain, what you describe happened to him pretty much word for word.

I could sell it now, but would have 80-90k euro taxes to pay. Wait a while and have none. Hence looking to rent.

I don’t know what the villa is worth, but someone offered you 70% of something (assuming c€210-220k net from €300k), or 100% of nothing (which is the cash you’ll have) which would you prefer? I know the tax sounds high, but getting around it is unlikely to be as simple as you think.

Also, this house counts as a second home. If you move in the U.K. you’re quite possibly paying the extra Stamp Duty on your next property

[mart 63]

You could get some decent income, depending what part of Rojales it is. Not many villas with pools in Rojales town itself. I live on the outskirts, what part is your villa at?

[goingonholiday]

As has been said long-term renters rights in Spain make it a non-starter for me.

Short-term holiday lets can be worthwhile. Not sure on your timeframe but if you are thinking one season then sell I would advise against. If its for several years and you'll build up the local contacts and relationships it can be worthwhile.

There will be heavy costs for management and turnaround, the tax take is very high! If something goes wrong you have to get it fixed, very quickly, that costs. Middle of someones holiday and the hot water is broken, they'll expect a plumber that day. The plumber then says the hot water cylinder needs replacing, I can do it but it'll cost you X. You have no choice, and most of the time you'll be relying on an agent and they'll probably be inflating that plumbers invoice.

I would only do it if the price you can charge gives a really good profit after all costs and you can find a good agent!

[croyde]

Reading above about people moving in then not paying rent, sometimes for years.

No wonder locals can't afford to rent in their own towns in Spain as the landlords prefer to holiday let instead.

So the problem is solvable by the Spanish government and blame shouldn't be aimed at tourists.