The Essential Guide to Renting out your Holiday Home in Spain

Thursday, April 27, 2017

The Essential Guide to Renting out your Holiday Home in Spain

Research shows that most property hunters looking in Spain plan to rent out their property at some point, meaning that there’s a lot of competition amongst landlords for guests. Spanish property owner Zoe Dare Hall provides some useful tips on how to follow best practices and stand out from the crowd.

How do you select the right property? 

It’s your holiday home, first and foremost – not a pure investment property – so naturally, it will need to be a home and location where you will want to spend holidays, or perhaps eventually to live permanently. But within your chosen area, there are factors to bear in mind.  First, think about the number or potential rental weeks you can squeeze out of a property. Ibiza’s rental season is becoming longer by the year, but not all holiday coasts are year-round. 

Once you have decided whether you are a city or resort type, you will also need to establish whether you favour a new-build (probably on a managed development or resort) or a standalone, resale property.  Both come with their pros and cons.  Resorts offer leisure facilities, bars, restaurants and shops, to the extent that you barely need to leave the gates.  La Manga on the Mar Menor has properties booked out throughout summer among families prepared to pay high prices for the ease of having everything on tap in an English-speaking environment.  Wonderful as they are, such resorts can lack the feeling that you are actually in Spain, though. Also bear in mind the high annual resort fees (also known as service charges or community fees) that you pay as an owner – and that you will be competing with dozens of similar properties on the holiday rental market.

A non-resort property – an old village house, for example, or a more rural finca  – comes with charm and character, but it  can be a nightmare to deal with broken  boilers and renter’s panics (“Where shall  I park?” or “Why can’t I get hot water?”)  when you are 1,000 miles away.  Do not underestimate the convenience of having a rental management team on tap. It can be hard to find someone reliable to deal with the regular cleaning, repairs and key handover required with a holiday rental. It took me seven years with my old Andalucian townhouse.  Resorts will have maintenance people on hand. Where my house is, in the hills within sight of Marbella, many tradespeople don’t use mobile phones or email. You contact them by walking round to their house, leaving a message with whichever family member is there and hoping that you are in when they drop by. This doesn’t work either when you live in a different country. 

Rental management companies come with high costs, though, which you will need to factor into the all-around profitability of your holiday home.

Who are you targeting?

Knowing your audience is key to letting out your property. It will determine everything from where you advertise to how you furnish the place – and prevent you from wasting time and money targeting the wrong people.

Talk to local agents, survey the area (what type of foreigners are sitting in the local cafés?) and work out whether it’s more The Sunday  Times or Facebook that is going to snare some bookings.  The big portals – HomeAway/Owners  Direct, holiday lettings/TripAdvisor and  Airbnb – make the process easy, but it’s  not cheap. Owners either pay a percentage of each booking (beneficial if you have a smaller, cheaper property, or get relatively few inquiries) or an annual fee. You can deal with all payments online, which provides peace of mind to both sides, and you can boost your bookings with good reviews.  “Once a potential guest has contacted you, make sure that you reply promptly.

The quicker you can respond, the more likely it is you will secure a booking,” counsels Saskia Welman of TripAdvisor Rentals. “Be communicative and helpful to your potential guest.”  Repeat business and word of mouth are perhaps the most sought-after sources of bookings, however. They cost nothing in marketing and bring in people you can trust. Alternatively, says Tim Swannie of Home Hunts, “we always recommend you speak to a reputable agency. Websites can work well, but it pays to have a professional rental agency to manage the property. They will advise on insurance,  vet tenants, arrange changeovers and let  you know of any specific local rules.”  How to furnish your property is a balancing act between providing an attractive home from home, with all the required gadgets, and not spending a  fortune [see red panel on page 42]. Do your best to make sure that your home has enough facilities for a number of guests that can stay. If it sleeps six, make sure there are six plates, six chairs, etc.

 It needs to be a comfortable stay for all.  “Well-equipped but definitely not cluttered,” is what Swannie advises. Some things are standard: a fully-fitted kitchen with the utensils and gadgets that people have at home. It was hard to even to buy a kettle in Spain 15 years ago; now renters expect cafetières at the very least, if not a Nespresso machine. Without a dishwasher, satellite TV and wi-fi these days, you will lose out on bookings.  Equally, families with infants expect high chairs, travel cots and stair gates (if relevant).  Bear in mind that all short-let properties see lots of wear and tear. Don’t keep anything there that you don’t want to lose; new DVD boxsets soon go on travels of their own.

Remove the personal element; renters don’t want to see photos of you. And although wall-to-wall Ikea makes everywhere look the same, there are certain benefits in knowing that you can easily pop back to the store to replace a broken chair or pick up a new set of wine glasses.  High-paying renters will expect some extras too. “That may be regular cleaning or more creative ways to provide perks without having to spend money. Some owners partner up with local yoga studios or cafés to offer discounts to their renters,” says Kozhevnikova. “Another way to set yourself apart from the competition is to provide local touches, such as stocking your bathrooms with traditional Spanish products or leaving a good bottle of Spanish wine. They will leave a lasting impression.”

Keep it legal

One crucial element to be aware of in Spain is the rental laws that apply in each region. Most now require properties to be licensed; the ones that don’t are not where overseas buyers typically look, such as Rioja and Extremadura.  Andalucia is the latest region to introduce holiday rental licences; without one, you face a big fine, and it is a big source of disgruntlement. To qualify, the property has to fulfil certain requirements, such as having central heating and air-conditioning, which is a costly and, in some cases, impossible addition.  “The local mayor said our village couldn’t cope with the amount of power needed if people started installing central heating,” reports one English homeowner in Ojén, near Marbella. “Everyone will suffer.

 We can’t afford to make these changes and rent out our home anymore, which means we will no longer employ a cleaner or maintenance people and our renters, who have been coming for 30 years, will no longer be here to use the local restaurants and businesses.”  Short-term rentals are a hot potato in Barcelona, too, where only properties that are already licensed can be rented out. So if you are buying with holiday rentals in mind, make sure you buy a licensed property. The local resentment towards endless streams of Airbnb renters is palpable in areas such as Barceloneta, near the beach, where apartment buildings are festooned with banners demanding the end of holiday lets.  “We would recommend looking at other districts close to the centre, such as Example, Poblenou and Diagonal Mar,  all of which rent out well throughout the year,” comments Rhodes, from Lucas Fox  (see our feature on page 44). 

And finally, there are the admin elements of having a Spanish rental property that must not be overlooked – ensuring you have adequate buildings and contents insurance, paying the correct tax (you must declare your rental income, and pay the appropriate income tax, to the  Spanish tax authorities).  “You can offset mortgage interest costs and expenses as an allowable expense in the UK and Spain. You will, of course,  need to document income and expenditure, as well as providing proof, by means of an HMRC certificate of tax residency in the UK and submit this to the  Spanish tax office,” says Reynolds of  Property Venture.  To make a success of renting out a holiday home takes effort, but the returns can really be worth it. And with 75 million holidaymakers at your disposal, you will surely find some who will love your home.

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Zoe Dare Hall

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Zoe Dare Hall