Renting Out Your Spanish Investment Property

Do you want your overseas investment property for renting out, or for your own use? That is often the first question asked. But it can be for both, especially in Spain.

With so much financial and political uncertainty around the world, many holidaymakers are looking towards the destinations that they know and trust rather than exploring further afield, and Spain comes top of the list.

The number of tourists flocking to Spain rose by around 10 per cent to nearly 75 million in 2016, and that trend is expected to continue, with more British visitors than any other nation.

Many of these visitors are also looking to stay in a property of their own, with the added space for family and friends that offers over hotels. But they would like their investment to pay its way, and that is where renting out the property comes in.

If you are planning to rent out your holiday home, there are many factors to consider.

Location

If you are looking for a holiday home to use yourself, then naturally you will want to choose a place that you are happy with. However, if it is also for renting out then you should consider location carefully.

You may get a lot for your money in the Costa Brava, but most of the restaurants and bars close in the winter, so the season for renting out is limited.

The Costa Blanca and Costa del Sol on the other hand, may be more expensive, but they enjoy over 300 days of sunshine per year, and with many golf courses adding to the attraction enjoy a season lasting from February to November.

To attract visitors the whole year round, there is the option to go for properties in the two main Spanish cities of Barcelona and Madrid. Or if it is a traditional holiday location you are after, then one of the many Canary Island resorts enjoying an all year round temperate climate can ensure the maximum potential for renting out your property.

Type of Property

An old Spanish village house may be your dream and will both ooze charm and character, and also let you feel you are part of the true Spanish experience. However, they can also come with problems when renting out, such as maintenance problems when you are far away.

A new-build property on a managed development or resort will normally come with maintenance and rental management teams on hand to deal with day to day management and general repairs.

This available on-site presence can be very helpful, but it comes at a cost.

Full rental management contracts will normally cost around 20-25 per cent of rental income, and may also limit the time that the owner can stay in the property during peak season.

Legislation

Spain is made up of various regions and they all have their own rules when it comes to renting out properties.

Most regions attractive to holidaymakers have varying rules when it comes to renting out, with some more strict than others. In Barcelona for example rules are strict and only properties that are already licensed can be rented out short term. So, if you buy a property without a licence, you are unlikely to be granted one.

You must also make sure that your property is covered with correct buildings and contents insurance and make provision for tax liability.

Mortgage interest costs and expenses are allowable against tax in the UK and Spain, but you will need to be able to provide proof of all this, and also tax residency in the UK if appropriate.

Renting out your holiday home in Spain may take some work, but with the number of tourists rising every year you could well be able to finance your investment completely by renting it out and enjoy plenty of free holidays yourself.