Renting property has few risks and many benefits. Most expats rent on arrival in Spain and as 60% return home in their first year it is obviously a sensible option to rent as opposed to purchasing straight away. You are contracted for the term of your rental and theoretically must pay up the end of that term even if you wish to move on. In Andalucia most rentals for expats are por temporada (short term) contracts and many are 11 monthly renewable if from one expat to another - frequently the case. The 11 months effectively distinguishes that it is a short term let as opposed to a vivienda (long term rental) and you are not automatically entitled to a renewal at the end of the term. Furthermore, many short term contracts may be on properties for sale and often the landlord reserves the right to sell the property, with a sensible notice period, within the time span you are contracted to rent. You should not be paying either community fees or IBI (annual property tax) on a short term contract.
Long term rentals provide more security but may mean that you pay community fees and IBI. As a long term tenant you have the first refusal if your landlord decides to sell the property, this right is called tanteo y retracto. If you have a long term contract for say 5 years and your landlord fails to advise you that he does not wish to offer a renewal then you can stay for another 2 years.
From the landlord’s perspective there is more risk for him/her in letting out their property to you. All landlords in Spain are nervous of gaining sitting tenants as before the updated Ley de Arrendamientos Urbanos (Law of Urban Lettings), in effect from 1995, it was easy to find yourself with sitting tenants who had to pay only insignificant rentals over the long term. This is no longer the case and sitting tenants can be evicted or have to pay market rental prices.
Landlords also have to pay tax on the income from rental, however it is on profit over costs. If you have a mortgage on the property, you are paying community fees, IBI and repairs it is unlikely that you will be in profit. Buy to let is a convenient way of reducing the costs of running an additional property but, unless you are mortgage-free, you are unlikely to have a serious tax issue. None the less the correct forms should be completed each year with your tax declaration.
Red Tape consultants can help with rentals or lettings in the following ways:
- Provide standard short or long term contracts for personalization
- Provide property management services
- Act as key holders
- Mediate in disputes between tenants and landlords
- Market the property for rental
- Check the property and contract maintenance and repair services.
Let Red Tape tie up a solution today
Contact: Jose Ensenat on 661 341 568 or at jose@redtape.es