Setting up Spanish Dream Property was a natural progression in our lives. We already owned our own Spanish property, had many contacts in different trades in Spain, Bev had experience in property finding in the UK, already ran a successful business and has written for a UK based Spanish magazine.
Description: Here we have an impressive detached villa for sale in one of the most picturesque corners of Ciudad Quesada (Adjacent to the natural Recorral park). The villa (built in 2007) occupies a landscaped and easy to maintain 300sqm plot which offers: covered off-road parking, a private swimming pool, BBQ/outdoor dining area, a storage/utility room, plus an abundance of private seating areas.
Ref: CM6330 Type: Villa / Detached Area: Costa Blanca South Town: Quesada
Is renting your house as a holiday let still a viable option? Part three
So what do holiday-let owners need to do?
First, this is a blog not legal advice. Second, rules change and new additional requirements will be added over time, so this relates to summer of 2018 and Alicante region only as I understand things currently. In fact, as I write this, a new rule for the Valencian Communidad has just come in!
As from 9th July 2018 all new applications will first need a certificate of compatibility from the local Town Hall. There are over 500 Town Halls and it is likely each one will set their own criteria! I have been told my Town Hall is estimating a waiting time of 2 months, but I suspect few Town Halls would have been ready on time, generally things get organised after the requirement has started!
Inspections have finally started too, which were not set up until recently in most areas, so more waiting while you take your turn in the queue for someone to check over the property before your licence is issued.
If you don’t want a large fine, then get legal! You can either pay one of the legal companies who do them to get it for you at a very reasonable rate or fill out the form (which can be downloaded) and submit yourself. You can attend the offices in Alicante in person, or take the completed form and supporting documents to the post office for stamping and post it. There is also the option of doing the process on-line, you would need to be confident of your Spanish to do this. There is a waiting time of approximately 3 months in Alicante (on top of your wait for the Town Hall’s certificate and inspector).
Now you have your licence you will need to purchase the official plague – it is a very bright red and not very attractive! You display this close to the entrance door either inside or outside the property. We opted for inside as it didn’t look very weatherproof or attractive, then we had a smaller, discreet plague made for outside. You must also buy official complaints form and put up the official notice to tell your guests they are available; both are in Valenciano and Spanish only, it is unlikely anyone would want to complete the forms in triplicate and submit them, but you must still have them.
And then you must attend your local Guardia Civil (national police) station, in person, to register with them and obtain your passwords for their on-line register of visitors. We were one of the early applicants and when we went into the station to ask about making the appointment a confused officer asked why he would want to know who was staying in our house! He asked another officer, and another, who both shrugged. So we asked our solicitor to phone them and she was able to make the appointment for the following day. It seemed that at that time not even those who had to process your application knew anything about it! But, it transpired, there was just ONE officer appointed to this job who spoke only Spanish and appeared to have all day to do just one set of forms. I’m told that he is still the only one at that station and has a massive waiting list for appointments. But without your user name and password you can’t access the site and submit the guests’ details, so you can’t legally rent out. More delays in becoming legal.
The on-line form on the Guardia Civil site requires owners to enter various passport details for all those guests over 16 years of age. Hotels have been doing this for years but have a scanner whereas we do it manually. We added a clause to our contract to say that refusal to provide the details required under Spanish law in advance of their arrival would be treated as a cancellation of the contract by the renter as a protection against people refusing to provide the information when they arrive – no details received then no details provided of how to access the house! It may seem a bit brutal, but they wouldn’t get their room keys in a hotel without their ID being scanned/shown, and why would anyone refuse if they have nothing to hide from the authorities? And why should we pay a very heavy fine for their refusal to comply with the law? We also added GDPR info to our web site, booking form and contract to state what we would need and what will be done with the info.
So, there you have it – how to rent out legally, just don’t expect to ‘get legal’ quickly!
Is renting your house as a holiday let still a viable option?
Part two – So what is a holiday-let?
The very first question requiring an answer is what constitutes a ‘holiday let’? Well each of the 17 autonomous regions in Spain set their own laws regarding this, so it is not necessarily as straightforward a question as it may at first seem! There may even be additional local laws that also need to be considered. So again, my comments relate to Valencian Communidad (and more precisely to the Alicante region within that). But all agree that anyone receiving payment in exchange for use of their property for a short-term period needs a licence. Even if only letting to family and friends.
You must furnish guests with details of the community rules, display an evacuation plan, provide a list of emergency telephone numbers and tourist information. And there is a list of equipment that must be supplied. All that is basic, and we were compliant anyway.
However, there are rules about what properties can obtain a licence. For all Standard properties there must be heating in all rooms, wall power points in all rooms, a fuse box (relating solely to that property). For the Primera (mid-range) properties you additionally need parking, air conditioning, a pool or be front-line to a beach and have a security box. Finally, if you have a Superior property then you need to add internet and a garden (can be communal). It is highly likely that some, if not most, of these will eventually also be required in Standard properties too.
But it doesn’t end there either. Next comes the size of the rooms! In a ‘Standard’ property the master bedroom must be at least 10m2, other double/twin rooms at least 8m2 and a single room at least 6m2. This allows for a minimum of 3.5m2 per person sleeping in the room. Bedrooms must have use of a wardrobe. If you have squeezed a shower, loo and wash basin into a cupboard, it doesn’t qualify as a bathroom unless it is at least 4.5m2; a living room must be at least 14m2 and kitchen 5m2. The rooms need to be larger for Primera and larger still for Superior. The only exception is for a studio apartment which must be at least 24m2 and include a separate but private bathroom.
All properties must be legal and have a Habitation Certificate (unless exempt due to age). They also need an ECP (energy certificate). But for some there are complications because some owners have made changes to their properties without the correct planning permissions. For instance, there is a design of house I know that lends itself to partitioning off a section of the lounge to create a ‘third bedroom’, thereby increasing the price you can charge renters, but if your house is listed at the land registry as having two bedrooms you cannot register it for rental purposes as having three. Aside from the room sizes for a rental licence as above, there are minimum specifications for what legally constitutes a bedroom including ceiling height and window size. This also rules out some converted ‘underbuilds’ (basements) with low ceilings and very small windows, especially those conversions that have never been granted permissions and not entered onto the property deeds as they don’t even officially exist.
I am aware of an apartment that is close to my house that is on the forth (top) floor that has been previously let out for holiday use, but as there is no lift it won’t qualify for a licence. Currently the rule in Valencia is up to a maximum level of three floors unless there is a lift. I am sure there are other complications too of which I am not aware. So, the answer to initial question of what constitutes a holiday-let is much more than just a property/part of a property rented out for holidays.
Renting your house as a holiday let still a viable option?
Part one – how and when things changed.
Many owners of property in Spain have rented out their properties for years as a way of funding the purchase, ourselves included. But recent changes in the law regarding rentals means some are now questioning if it is still worth it. This blog relates to property in the Valencian Communidad (the provinces of Castellón, Valencia and Alicante), but nearly all of Spain’s regions require holiday lets to be registered now.
The first thought for me when compulsory registration was introduced was that not a lot was going to change. We were already legally compliant in that we declared our rental income in Spain and paid our tax (after a few allowable deductions), plus declared our rental income on our UK tax return, (we are UK residents), and as we had paid tax in Spain we rarely needed to pay tax on the rental income in the UK as well (thanks to the UK/Spain dual taxation arrangements). However, it turns out that a huge number of owners were NOT declaring their income in Spain, and maybe some were not declaring it in their home country either! So for some there was a very rude awakening with a marked reduction in rental income when they had to start paying 19% of their rentals in Spanish tax. And some have been hit with very large fines for backdated undeclared rental income too.
We registered as a holiday-let with the authorities while it was still a voluntary process, knowing it was just a matter of time before compulsory registration would be introduced in the Valencian Communidad, and the law finally changed in 2015. There was a lot of publicity about it in the English print press in Spain, on forums, in solicitors’ newsletters, on the advertising sites and various other sources. And yet still owners didn’t bother. Eventually the authorities had enough and declared that anyone advertising an unregistered let after 1st June 2018 would be heavily fined, and that included the on-line websites which carry thousands of ads, paid for by owners, that are used by those booking self-catering holidays.
At the end of May 2018 chaos ensued. More than one major advertising site took all their Valencian Communidad properties off their site, only reinstating the properties once the checking of the registration number had been completed. For us this was particularly annoying as they had had over 3 years in which to run that check, our number was already clearly entered in the property details. For other owners this was, amazingly, the first they had realised that they needed a registration number!
I won’t go into details of how to obtain a registration number here, that is covered separately, but suffice to say a system that originally was fast and efficient has become overwhelmed during the course of 2018, and I’m reliably informed that the process is now so back-logged with applications that they are taking a minimum of three months. Bearing in mind that officialdom in Spain virtually shuts down for August, I can’t see that back-logged being cleared quickly. And that is just step one!
So, now there are owners who have decisions to make: do they register and risk drawing attention to their past illegal activity and undeclared income; do they stop renting out and lose the income; do they continue to illegally let the property and hope they don’t get caught (they will!). What a dilemma! They say ‘honesty pays’ – well it hasn’t up to now as we were worse off for being honest and declaring the income in Spain, but right now I am glad we did!