Many people considering buying a second home in Spain do so with an eye to renting it out when it's not being used by the family. This can be a good way to make sure the property pays for itself but, before you leap onto the rental market, you should look at what the law says.
In 2013, the law in Spain was amended to devolve regulation of holiday lets to the region in which the property is located. Simply, where your property is based affects what you are allowed to do.
The law change was brought about at the behest of hoteliers throughout the country who felt that, while they had to adhere to strict rules and regulations relating to hygiene, fire and safety etc., those renting out private residences got away 'scot-free'.
This new law attempts to redress the balance, as well as to raise the standards of rental accommodation to match that of hotels and, some cynics might say, increase the tax revenue from those renting out.
What Spanish Property Law Says
Essentially, the law varies for each of the 17 self-governing regions of Spain. For example, some inland areas with low tourist visibility such as Castilla-La Mancha (of Don Quixote fame) and Castilla y León have no regulations.
While holiday hotspot areas such as the Canary Islands and the Balearic Islands have extremely strict standards (yet vary between islands).
Here's a taste of the regulations applying to other areas:
Holiday properties are subject to strict criteria in terms of the accommodation and furnishings provided. In addition a recent modification to the law on holiday rentals states that all holiday properties must be registered with the Register for Tourist Businesses, Establishments and Professionals.
Once registered you will be provided with a registration number and this number must be included in all advertising and publicity materials for the property. Failure to include the registration number in your advertising could result in fines for both you and the advertising channel.
You cannot rent out a flat for fewer than 30 days and if you are renting out a holiday property you must offer the property for rent for at least July, August and September, the intention being to stop people from living in their beach homes during the summer months.
At present if you are renting out only one holiday property then there is no requirement for that property to be registered.
However, if you are offering more than one holiday property for rent then you must register these properties. Please note that the law will change in 2015 or 2016 and that the new rules will state that all holiday properties must be registered.
The implementation of the law is still pending in this region, but that hasn't stopped some localities issuing fines.
It is generally understood that the local government is close to approving a new law and so it will be important to keep abreast of the latest developments if you intend to purchase a property to use as a holiday let.
Legislation came into force in this region in 2012, requiring that all holiday rentals in the area be licensed, but there are tens of thousands of properties still not licensed and property owners facing fines that are enforceable.
To make it even more confusing the regulations throughout the regions are often subject to change so, if you are considering renting out your property, you should check carefully what the requirements are in that area.
The Risks of Non-Compliance
Not adhering to these local regulations comes at a hefty price. Since the law came into force, fines amounting to €537,771 have been issued in penalties; there have been 284 cases brought with owners and agents receiving fines of anywhere between €3,000 and €24,000.
But it hasn't stopped at just agents and owners being penalised. The Catalan government recently issued a fine of €30,000 (approximately £24,000) to internet sensation Airbnb for 'a serious breach of local laws' - publishing details of rental properties that have not been registered with the Tourism Registry of Catalonia - and has threatened to block Airbnb from operating in the region.
What are the Costs?
The localisation of regulation means that the licence cost also varies depending on which region your property is in. Some areas operate on a set-fee basis, with fees known at the time of writing between €177 to €500, but other areas like the Balearic Islands work out the cost on a per guest basis.
In all cases, though, the licence fee is a one-off cost, which should be factored in if you are planning to rent your property out.
Take Out Insurance
Don't forget you will also need to ensure adequate insurance cover, including public liability and specific rental insurance, and you will also need to declare any earnings to the Spanish tax agency, as well as to HMRC if you are resident in the UK.