Essential Guides & Advice Advice On Buying To Let In Spain

Date Published:

17/04/2009

Over the last two years, mortgage rates in Spain have been on the rise, making life increasingly difficult for the thousands of Britons who have borrowed to buy a holiday home there.

Don't let your dream Spanish pad become a nightmare

Between August 2005 and September 2007, the interest rate on a typical variable-rate mortgage increased from 3.22 per cent to 5.67 per cent, adding nearly £100 a month to the cost of a typical 20 year £70,000 loan.

To make matters worse, the property market in Spain has suffered some serious blows in the media, with articles about corruption scandals, problems with illegal building and talk of falling property prices published on a weekly basis, scaring off the very buyers who have been keeping the ‘costa’ market afloat.

Logically, many property owners have turned to holiday rentals to help pay the bills. However they now face a new challenge: the need to have a tourist rental licence. Recent reports suggest that most holiday rentals in Spain are illegal without a licence, and unsuspecting owners can incur fines of €30,000 (over £20,000).

In actual fact, you only need a licence in some parts of Spain, and most owners are unaffected. However, as with most things in Spain, the legislation surrounding this can be tricky to make sense of.

Where do you need a licence to offer holiday rentals?

In the Balearics, you cannot rent out private residential apartments. The department of tourism in Palma, the regional capital, confirms this, and adds that licences to rent detached properties are no longer being granted on Mallorca. It is a similar story in the Canary Islands, because the authorities in both are keen to promote hotels over private rentals. Confusingly, licences are still being granted in Minorca.

Some tourist apartments are exempt

One exception is apartamentos turisticos – a special category of property built specifically for letting to tourists. But these carry a raft of other restrictions and potential extra costs that make them unsuitable for buyers looking primarily for a property they can use themselves.

Mainland Spain

As always in Spain, the law appears to vary from place to place. In Murcia, in the southeast, for example, anyone planning to let a private property to tourists must first register with the department of tourism, even though few bother. In most areas, however, you need only inform the local government about your plans to rent. It is hard not to believe that the real concern here is wanting to keep tabs on who is making money, to make sure that taxes are received. The best advice for anyone letting in Spain is check with a local lawyer, just to be safe.

Strangely, such restrictions do not apply if you rent out for a longer period – to someone spending the whole summer there, or to snow birds coming down from northern Europe for the winter sun. This can be more lucrative, too: although your tenants will typically pay less per week, there will be fewer voids and probably less wear and tear.

Finding An Overseas Property

You can search for your own dream foreign property at APlaceInTheSun.com.

Back to top