Investing in Buy To Let Property in Spain
The Leddy team are continually keeping an eye out for good quality properties that we think will make an ideal buy to let investment and here are a few examples that we have recently picked. The three main things that we look for are location, price and condition.
Beach-side and golf properties have by far the highest letting value, but therefore also command a much higher purchase price, whereas villas and apartments further inland are cheaper to buy but have a slightly lower rental income. All areas on the Cosat Blanca and the Orihuela Cosata are equally popular with the holiday makers and golfers.
Cheaper isn’t always better as price will directly reflects the location and condition of the property. Buying a new build properties could end up costing less in the long run than the equivalent resale. For example, even though a new build apartment or villa may initially cost more to buy than a resale, when any reformation or modernization work is taken in to consideration, the end price can be surprising. It can sometimes be confusing, but that is what we are here for.
A new build property will more than likely be ready to go straight onto the letting market (with some furnishings) whereas a resale property may be fully furnished but in need of some work. We select properties that we consider are priced competitively yet have the minimal amount of additional costs.
Generally we don’t think much will change regardless of the outcome of Brexit. People from all over Europe will continue to flock to Spain for the fabulous weather and the first-class golf. There are currently very few restrictions on buying any type of property in Spain (whether you are an EU citizen or not) and the Spanish government actively encourages foreign property investors regardless of whether it is as an investment, a new home or as a buy-to-let project, this we think will remain the case. Setting up a Buy-To-Let business can be extremely profitable and rewarding and it is certainly worth the effort getting everything properly set up.
Some things you should look Into
Obtain a NIE number. An NIE number is simply a personal fiscal ID which is needed for any financial matters and everyone in Spain has one of these regardless of whether they live here permanently. It can be easily acquired from a police station with just your Passport.
Decide how you will run your business. It is now very easy to advertise and manage your property letting on the Internet with the hugely popular booking websites such as www.airbnb.com, www.tripadvisor.com and www.booking .com.
The tax on profits from rental income is 19%, and because of the tax agreements between all EEA (European Economic Area) member countries, you only need to pay this tax in one country. There are a number of expenses that can be deducted from the gross rental income such as;
- Notary or Solicitors’ Services
- IBI (Property Tax)
- Refuge Collection Service Tax
- Property Depreciation
- Urbanisation/Community fees
- Advertising fee’s (such as Airbnb and Tripadvisor etc)
Register your property with the local Tourism Office. You will need to obtain an official licence via the local Tourism Registry office. This is a simple “declaration of responsibility” form that asks you to confirm that you have provided the following, some of which are fairly obvious;
- Heating for the months October to April
- Air Con from May to September
- A Telephone number for the visitor to contact you
- A first aid kit
- Having a complaints book
- Providing tourist information about the area
- Drinking water
For more information, please read our detailed guide on How to register your rental property