Renting out a house in Spain: pitfalls & tips

Renting out your holiday home in Spain

You have bought a property in Spain, or you are about to do so. However, you also realize that you won't always be in your (holiday) home. Furthermore, Spain is one of Europe's premier holiday destinations. This presents a great opportunity to rent out your property (for part of the year). This way, the property remains vacant for a shorter period, and you can recoup some of the expenses. Or you can even view it as a Spanish real estate investment!

But what exactly should you look out for when renting out? Many buyers fall into pitfalls because they only take this into account too late, and furthermore, the rules in Spain are becoming increasingly strict. Not to mention that the rules in Spain are not transparent. We are happy to give you tips to help you avoid these pitfalls.

Difference between permanent rental and tourist rental

Before we delve deeper into the subject, it is important to distinguish between permanent residence (fixed-term rental) and short-term (tourist) rentals. In the case of the former, legislation in Spain is very strict, and you are essentially unable to use the property yourself.

The second option therefore concerns short-term rentals, where you also use the property yourself for part of the year. In principle, a maximum rental period of 1 month applies. The rules regarding this fall under tourist rental legislation. We will therefore only discuss this type of tourist rental.

Starting point for renting: purchase of the home

We regularly receive questions regarding the possibilities of renting out a property purchased through Spaanse Hypotheek. It is quite common for rental options to be not taken into account during the purchase, even though this was a specific wish at the time of purchase. This is one of the biggest pitfalls we see. You should take the following aspects into account:

Rules for mortgage financing of a Spanish property

Unlike in the Netherlands, Spain does not have an occupancy requirement for purchases financed by a mortgage. Therefore, the Spanish bank where you arrange the financing will not impose any conditions on renting out your property as a non-resident buyer.

We do, however, regularly receive the question whether (potential) renting out affects the amount of your mortgage. We can be brief about this: no. The Spanish bank views the purchase as a private matter and will therefore only assess you as the buyer regarding the maximum financing possibilities. Any future income is also for your private use.

Incidentally, this also applies to more business-related rentals, such as a B&B. You purchase the home as a private individual.

Rules for tourist rentals from the local municipality

Just like in Amsterdam, problems surrounding tourist rentals have not been absent in Spain. Therefore, local authorities in Spain have also started cracking down more strictly on short-term rentals via platforms such as Airbnb, to prevent nuisance and protect their own hotel industry.

In Spain, it is necessary to obtain a legal permit to rent out a property, and the property must also be registered. Especially in very touristy cities like Barcelona or Palma, it is nowadays very difficult to obtain a rental permit.

So make sure to thoroughly check before the purchase whether the municipality actually issues permits!

Rules for tourist rentals from a residential complex

In de Spaanse huurwet is opgenomen dat eigenaren van een woningcomplex, zoals een condominium / appartementengebouw meer rechten krijgen om beperkingen in verhuur op te leggen. In Spaanse binnensteden zijn woningcomplexen eerder de regel dan de uitzondering, dus ook hier dien je eerst navraag te doen bij de eigenaar van het complex.

Which party helps you buy a house to rent out?

There are a number of parties that can advise you on the possibilities of buying a Spanish property that you can also rent out in Spain. We will explain them one by one:

1. The (buying) agent

Your purchase often begins with a buyer's agent who guides you through your Spanish adventure. The agent is usually well-informed about the regulations and the requirements/wishes of the local municipality, seller, and owner of a complex. So always ask about this.

Do keep in mind, however, that the real estate agent acts out of personal gain. The sale of the property is always the agent's top priority, and issues such as a hard-to-obtain rental permit are often swept under the rug or talked over. Does the agent remain vague about the possibilities? Then do more research yourself!

2. The seller (e.g. property developer)

Naturally, the seller also plays an important role. Especially in the case of a property developer of a new construction project, the seller will often honestly indicate whether renting is desired. Please note: a seller of a private property, however, will also act from a sales perspective and avoid potential issues related to renting.

3. Legal advisor / lawyer

Finally, you have the only truly independent party that can assist you. A legal advisor works in your best interest and considers all interests—that is, those of both the selling party and the requirements of the local municipality. If you want certainty regarding the possibilities, we recommend engaging a good lawyer. After all, they often help to actually arrange the permit as well!

Tip: Spaanse Hypotheek has good contacts with experienced legal advisors. Ask us about the possibilities.

How do you arrange the permit to rent out your Spanish (holiday) home?

Great, you’ve bought your Spanish property, congratulations! But now you want to rent it out. What exactly do you need to do? Since the new Spanish rental law, this has become stricter.

What you need is a rental permit, or registration number. You must therefore register your property with the local government / municipality. To do this, you submit an application form (declaración responsable) in which you must also be able to demonstrate that your property is legal and suitable, and meets fundamental health and safety requirements, such as:

• A heater and/or air conditioner
• All sanitary facilities complete
• Electricity
• Clean drinking water
• Landlord's contact details
• etc.

You can request the form from the Servicio Territorial de Turismo. You can have the completed documents stamped at the post office and sent to the nearest Registro del Servicio Territorial de Turismo. You can submit the application form yourself, but providing the housing requirements is again a matter that a legal advisor can handle for you. Often, the registration is arranged directly by the lawyer. Ask us about the possibilities.

Please note: registration is mandatory when renting out. If you rent out illegally, you face fines of up to €100,000.

Practical tips for renting out your Spanish home

We have put together a number of handy tips for you so you can rent out your house worry-free:

Take into account a long process

In Spain, everything moves slower than in the Netherlands, especially when it comes to government agencies. Outsourcing to a professional party often speeds up the process and ensures you don't overlook details that would make it take even longer. Allow for 7 to as many as 20 weeks.

Outsource the rental

It is often thought that you can simply list the home on Airbnb yourself and that takes care of it. However, there is more to it than you might think. Here is a summary:

• You have a registration obligation regarding tenants (name, address, and place of residence details, proof of nationality, etc.) and you are required to share this information with the Guardia Civil or Policia Nacional.
• You are required to arrange the cleaning and property inspections.
• Regular check of alarms and gas/water/electricity
• Home maintenance (incl. garden or swimming pool)
• Maintaining marketing (rental platforms or via own network)
• Multilingual key issuance (although this can also be automated)

In addition, you have a tax obligation, which entails quite a bit of paperwork. Ask if a property manager in Spain offers this as well! Generally, you will spend 15 to 20% of the rental income on this, but it often certainly pays for itself.

Don't forget your tax return!

If you rent out a house in Spain, you are liable for tax. You must declare the rental income to the tax authorities. In the case of tourist rentals, this is done once a quarter. This is where the registration requirement comes into play again, as you use this form to file this tax return. You use Form 210 (Modelo 210) for this purpose.

Do you want to know everything about this? Then order our costs & taxes guide.

Download here

You can also outsource your taxes, so you always know they are filed on time.

Purchasing a property in Spain for (partial) rental

Would you like to buy a property in Spain that you wish to rent out (partially)? Then ask about the possibilities at Spaanse Hypotheek. Our advisors assist you throughout the purchasing process with well-considered financing and the right decisions. We also support you through our professional network, which provides you with advice and assistance.