As Spain sees its tourist figures break new records year on year, the market for renting out your Spanish holiday home has never been better.
In 2016 tourist numbers witnessed an increase of 10% on the previous year totalling nearly 75 million visitors, Andalucía, home of the Costa del Sol, enjoyed the largest growth in numbers. This year the number of tourists visiting Spain is expected to reach a record breaking 80 million.
For many holidaymakers, the option of space, flexibility and value for money offered by holidaying with friends and family in a private home as opposed to a hotel is very much a growing trend.
As an owner, the prospect of renting out a holiday home may not at first seem straightforward, there are always potential problems, from basic plumbing issues to double booking the property. Some holiday-home owners can’t bear the idea of anyone else sleeping in their bed and wouldn’t dream of becoming a holiday landlord. But the trend, at all price levels, is for buyers to want their holiday home to pay its way, whether they have a €5 million villa in Marbella or a €150,000 apartment in Fuengirola.
Enter the market armed with the right information such as knowing your target market and understanding your legal and fiscal responsibilities, and you will find that much of the financial responsibilities of owning an overseas property can be removed by renting out your Spanish home.
Choosing the right property
So, how do you go about choosing the right property? Assuming you’re purchasing holiday home rather than a pure investment property, obviously the property and its location will need to be where you want to spend holidays, or maybe even eventually to live in. However, there are factors to bear in mind within your chosen area.
Firstly, how many potential weeks of rental do you hope to achieve with your property? With 320 days of sunshine per year and an abundance of top class golf courses, the Costa del Sol is known for having a year round market, however towns and villages that are further from Málaga airport such as Casares and Sotogrande will be a lot quieter outside of peak season compared to resort towns such as Benalmádena, Fuengirola and Marbella.
If you are serious about generating income from you Spanish home, you should target year-round destinations that have everything – restaurants, bars, entertainment and cultural venues, nightclubs, shopping, golf and of course beaches.
Once you have established the general area you like, you will need to decide if you prefer a new build – usually in a resort – or a stand alone re-sale property. Both options come with positives and negatives.
With leisure facilities, shops, restaurants and bars, resorts will have properties rented throughout the summer months to families prepared to pay extra for the convenience of having everything on hand. Nonetheless, properties in resorts and urbanisations will come with annual community fees that as an owner you will pay, plus you will likely be in competition with numerous other rental properties.
Alternatively, the charm of a quaint village townhouse, or a rural finca may hold more of an appeal. But handling a broken boiler or renter’s problems (“We’ve got no hot water” or “the bathroom is flooded”) can be a nightmare when you are thousands of miles away.
Do not underestimate the benefits of employing the services of a rental management company. Finding someone reliable to administer the regular cleaning, repairs and key handling required when renting your Costa del Sol property can be difficult.
Rental management companies do come with costs which of course you will need to factor into the profitability of the business of renting out your holiday home. Most rental property owners view this as an affordable expense when faced with trying to find a reliable tradesperson to fix a problem when they have a family of holidaymakers due to arrive for their fortnight in the sun.
Know your target market?
Knowing your target market is key to a successfully renting your holiday home. Not only will this will help decide everything from the way you furnish the property to where you advertise, it will also save you time and money targeting the wrong people. Research the area, talk to locals agents and business owners, see what type of holidaymakers are frequenting the bars and cafés to decide whether it is The Sunday Times or Facebook that will help you capture those all important bookings.
Whilst the larger advertising portals (Airbnb, Owners Direct, Holiday lettings and Trip Advisor etc.) do make the process easier for owners, they are not cheap. Each company either charges an annual one-off fee or a percentage of each booking they generate. Positive customer reviews can help increase your bookings plus all payments can be handled on-line giving both parties peace of mind.
The most desirable source of rentals are understandably word of mouth and repeat bookings, after all, they cost nothing in advertising and will be people you know and can trust. Alternatively you can employ the services of a professional rental agency, web portals and private websites can prove successful, but it pays to have a reputable management company to look after your property. Choose RAD Property Services and we can handle all the advertising and marketing of your home, screen tenants, perform meet and greets, organise changeovers and ensure your property adheres to the Andalusian rental laws.
Furnishing your rental home is a fine line between providing an appealing property for your guests with all the creature comforts, and not spending a fortune. It is important to make sure you provide enough facilities for the number of guests that might stay. If you are advertising a property that sleeps eight, make sure the property contains at least eight plates, eight sets of cutlery, eight chairs etc. Certain items are standard, nowadays renters expect things like a dishwasher, satellite TV and Wi-Fi, without them you will miss out on potential bookings. Similarly you will require high chairs and travel cots if you are hoping to rent to families with infants, although if using a good rental management company they should be able to provide these at a small weekly cost as needed.
Remember, a holiday let property will see a lot of wear and tear, whilst properties decked out in IKEA may all have a universal look, there are benefits to knowing a broken plate or a smashed wine glass can be easily replaced. Remove the personal element, keep those family photo’s along anything you don’t wish to lose in a lockable cupboard or storage room for when you visit.
Keep it legal
One important aspect not to forget are the rental laws that apply in each region in Spain. All of the popular holiday areas, including Andalucia, now require properties to be licensed, without one, you face a big fine. Known as the decree 28/2016, the law stipulates the minimum requirements for your holiday home to accommodate guests such as having central heating and air-conditioning.
There are a number of other points included in the decree all designed to ensure your property is suitable for the purpose of tourism. A reputable rental management company will be able to help you ensure your property meets the necessary requirements and apply for the license.
Lastly, do not overlook the administrative elements of having a rental property in Spain. Make sure you have adequate home, contents and liability insurance and don’t forget to pay the correct taxes (all rental income must be declared and the appropriate income tax paid to the Spanish tax authorities).
Mortgage interest costs and expenses can be off-set as an allowable expense in both the UK and Spain. Of course you will be required to document income and expenditure, and also provide proof in the form of an HMRC certificate of tax residency in the UK and submit this to the Spanish tax office.
Turning your holiday home into a successful rental business takes a little effort but, with a potential 80 million holidaymakers at your disposal in 2017, the returns can genuinely be worth it…