Poco Loco *little crazy - Buy to Let in Spain

[Goldberg Global]

Look at this - more people buy and have their properties left empty than rent them out.

Spain's high rental income tax rate of 24%, for instance, combined with restrictive tenancy laws, has led to the shrinking of the private rental market. Property owners prefer to keep their housing units empty rather than rent them out. In 2001, about 14% of the total housing stock was vacant, more than the entire rental stock (which was only 10% of the housing stock).

[barry uh spain]

A lot of that is due to the second homes being in coastal areas where long term rental demand is not that high and also due to the fact that those property owners will want use of the property themselves in the summer. Lets also not underestimate that plenty and rented out but I bet are not declared to the taxman.

[michaelbush]

In my view, if you treat the "buy to let" market in Spain the same as you would in the UK, then you will be buying product to let to local Spanish rather than to holidaymakers. I believe that the reason holiday let market is so poor is that there are now so many owners who used to rent, but now have their own second home to rent out.

The general product that Spanish rent or buy is not your seaside home or villa! Long term rental return may not be really great, but in the UK in the SE, returns dropped to 4% or so. In Spain the similar return is common.

[michaelbush]

The issue of long term rental, with tenants able to stay for 5 years if they stay more than a year, can be addressed, but dont you want long term tenants paying inflation linked rates? If you want tenant changes every year to protect your ability to sell, that can be done as well.

However the best deal for off-plan is to look for a spanish buyer when it is almost ready, (spanish cannot fund the developer finance requirements to buy before it is finished), or keep it and rent for 5 years, and then sell if you want to. Property is supposed to be a long term investment- peaks and troughs then even out.

[Aegean]

Think the long term investment is for home country - many Brits and others purchased a dream at high prices being told there was a great rental market.

Their fault not looking at all angles and finding out the reality. All that is happening now is prices are falling to a realistic level that they should be at. How can individuals make when slaes and marketing companies have been getting 10% for years pushing the Spanish market. where are they now - moved to other locations pushing prices up which in the end will end in tears for the gullable investors.

[michaelbush]

Different buyer profiles - dream home buyers often buy for their own holidays and eventual retirement. With the high number of people buying and high construction numbers it is obvious is it not, that supply would outstrip demand for holiday rental? Wherever you are property is long term! The problem comes when greed enters the equation, which makes it easy for sales companies to paint a rosy picture. We have consistently for several years advised "investors" to think with their heads, not their hearts. Buy for the Spanish market and let or sell back to the Spanish market. The major brunt of prices falling in Spain is in the second home for ex-pats who were oversold by the likes of Atlas, Parador, Ocean Estates etc. "FREE" Inspection trips and the closing room in 4 days!!