The cost of renting out your property in Spain.
First we need to mention that as each region is autonomous
there are different rules in some regions.
For instance, currently the Canaries, Balearics and Catalonia all require holiday lets to be
licensed but most regions do not. This
may, however, change in the future. So
this is not a legal guide regarding renting but a general commentary and
regional, local and community rules and laws need to be checked for specific
properties.
As we have mentioned in an earlier blog, your relationship
with your keyholder is an essential part of successful renting.
If they are not doing a professional job to
the standard you require then sack them and find a better keyholder!
Keyholding costs are likely to be 300 to 400
euros per annum plus the cost of cleaning after each guest.
The first, and perhaps most obvious cost, is that of
advertising.
In this day and age the
vast majority of bookings will come from having and on-line presence.
You don’t need to spend hundreds of pounds on
a fancy web site and then hundreds more on SEO work.
Use a couple of the big companies advertising
holiday homes on line.
Decide which ones
to use by making your own searches under ‘Spanish holiday lettings’ or ‘villas
to rent in
Spain’.
There are many small and free sites you
can use too.
However the ones that are
search engine optimised are the ones that get the visitors and so will get the
bookings too.
These will also charge the
most, say £250-£300 per year.
They are
easy to use and relatively quick to set up.
Of course if you can also utilise free advertising on a work-place
notice board, or similar, then do so.
Setting your rental rates is always tricky.
Be realistic about the rates you charge.
The best guide is to take the average rates
of properties very similar in size, style and location to your own by checking
out several web sites.
Ideally the
amount of the twelve high season weeks’ rentals will need to total the same as
your annual mortgage payments, but this is not always possible if you have a
large mortgage or use the property yourself during the high season weeks.
The rest of the rentals should then cover the
bills.
It is unlikely that your rentals
will also cover your tax costs if you have a large mortgage.
TAX! It’s not a
popular word. Despite what many will
tell you, including some fiscal representatives, you ARE liable for tax in Spain on your
rentals. The current rate is approx. 24%
after allowable deductions such as mortgage interest, utilities, community fees
etc, for the weeks that the property is let only. You will also be liable for non-residents
tax. The Spanish tax year runs 1st
January to 31st December. You
will also need to declare your income in the UK,
but if you have paid your Spanish tax it’s unlikely you will need to pay UK tax as there
is a double taxation agreement between the countries.
Insurance is another important area often overlooked.
Take out a specialist insurance policy with a
UK
company covering holiday lettings; and read the small-print!
Ensure you have good third party cover.
If you have a mortgage with a Spanish bank
they may insist on contents and building cover being part of the deal but
Spanish banks do not offer a comprehensive holiday let policy.
You need the policy in a language in which
you are fluent too.
When you receive an enquiry via one of the websites, contact
the people as soon as you can, preferably that day.
Remember you do not have to let your property
to anyone you don’t like!
You may decide
to refuse groups of people under 25 years old, or students, and we would
recommend you do not accept parties where they are all under 18 years old.
Once you are happy with your prospective client send a
booking form.
On this set out the basics
for your contract – the name and address of the booking client, names and
addresses of all party members, the ages of those under 18, the arrival and
departure dates and provisional times, the rental, the deposit, the date when
the rental is due, any compulsory extras, (such as cleaning fee), and optional
extras, (such as airport transfers).
You
also need to have a cancellation policy.
Generally there is a deposit payable on booking to secure the dates, the
balance of the rental plus the key deposit should be paid 8 weeks before the
holiday.
The key deposit is returned to
the guest within 14 days of the end of their stay, but this can be subject to
damage deductions, which must be justifiable if made and with proof.
Regarding the contract itself, there are some
good pro-former ones available from some of the larger advertising web sites
that can be adapted for your own use.
A
contract is essential, not optional.
