Renting out your property in Spain

Furnished or unfurnished?

Long or short term?

Many owners purchase properties for ‘long-term’ investment and seek a return on their investment through the rental market.

Provided best advice is given and taken at the outset, renting can be a relatively trouble-free form of property investment.

In any tenancy situation you should consult your lawyer to draw up the tenancy agreement.

At Fairway Lawyers we also provide taxation advice to property owners.

Below are some guidance notes for property owners considering entering the rental market.

UNFURNISHED LETTING

• The big plus point for unfurnished lettings is that there is little or no capital expenditure for furnishing costs – but there are minus points.
• There are far fewer tenants seeking unfurnished properties and it would probably take longer to find a suitable tenant
• Unfurnished lettings require you to offer a long-term contract (probably 2-3 years)
• During that time the property is completely off the market until the expiration of the tenancy agreement
• Under Spanish law, a tenant with a contract of more than 11 months can pursue their right to remain in the property for a period of 5 years, consequently, once let, you have less control over the apartment
• There can be difficulties with non-payers
• Unless otherwise agreed, rents usually rise annually in line with the cost of living index (in the region of 3-4% per annum)

The tenancy agreement should be draw up by your lawyer.

FURNISHED LETTING

Once furnished the property may be let on a ‘long-term’ contract or made available for ‘short term’ holiday lets.

Whichever type of letting you opt for, the tenancy agreement should be drawn up by your lawyer. Receipts should be obtained for all purchases as some expenses can be offset against rental income taxation.

Long term furnished letting

• Long term furnished lettings require you to offer a minimum contract of six months up to a maximum of 11 months (this restricts the tenant’s rights in the property according to Spanish law)
• The property is off the market until the expiration of the tenancy agreement
• Once let, you have less control over the apartment
• The rent is usually fixed for the period of the letting
• There can be difficulties with non-payers

Short term furnished letting

• With properly managed short-term lets you should have less wear and tear on the property as it is only used for part of the year
• The property is readily available for sale and should always be clean and ready to show
• Furnishings can be sold with the apartment
• Tenants pay in advance so there should be no non-payers
• You or your family can use the property when you wish
• You have more control over the apartment