Are you confused about the rules regarding renting out property in Spain? Many of those who purchase property in Spain do so with the intent of renting it out for holiday lets. Recent changes in the rules relating to renting out property in Spain have caused confusion. To be clear, property owners in Spain are free to rent out their houses or apartments to whomever they wish. In fact, it is one of the fundamental rights of property ownership, to earn rent from one’s asset.
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That said, Spain’s autonomous regions have the authority to legislate in order to regulate the renting out of property in Spain on a short term, or holiday let basis. Spain has 17 autonomous communities, including for example Andalusia, Catalonia, Valencia and Murcia, as well as the Balearic Islands and the Canary Islands to name six of the communities best known to those visiting Spain on holiday.
Why has the Spanish government changed the rules?
Over the past five years there has been a marked increase in the regulation of the rules regarding renting out property in Spain, spurred to a great extent by the powerful hotel lobby, as a direct reaction against initiatives such as AirBNB, and such websites as holidaylettings.co.uk and ownersabroad.com, the success of which clearly eat into the valuable revenue of the hotel sector. Also, the Spanish tax agency is seeking to monitor the income earned from holiday rentals, often hidden from their view by foreign owners receiving rental income in their countries of residence / origin.
What are the rules for renting out property in Spain?
The result is that property owners in Spain must now comply with strict rules in order to rent out their properties out on a short-term basis. These strict rules range from complying with standards set by the autonomous or local government, often relating to the safety and comfort of the property, to reporting requirements compelling property owners to inform the local authority, and sometimes even the police, of the identity of those who are renting their properties.
In the most extreme cases, such as in the city of Barcelona and in Ibiza, for example, properties may only be let on a short-term basis if the local authority has issued a licence specifically for that purpose. The effect of licensing the right to let to holidaymakers is that properties already benefitting from a licence to let have become far more desirable, and so more expensive than those that do not so benefit. Obtaining new licences is often very difficult, if not impossible.
What happens if you don’t follow the rules for renting out property in Spain?
Of course, there are those who flout the rules and let their properties without permission, receiving rental income in their home country. The danger of not complying with the rules is that in order to let property to the wider market, the internet is a valuable resource for property owners, the same resource used by Spanish tax inspectors to determine which properties are available for rental. By marketing your property to would be tenants you are announcing your business activity to the taxman.
New rules for renting out property in Andalusia, Spain
On 12 May 2016 the rules for renting out property in Andalusia, Spain, will tighten, so that in order to advertise your property lawfully for short-term lets you must have first complied with a number of requirements, notably including the following among others:
- To be registered as a landlord, which in turn will require you to submit tax returns and pay tax on the income earned.
- To identify each guest upon his/her arrival, so that unless you are resident in Spain, you will need to employ someone to receive your guests and identify them.
- To provide a complaint book, which the authorities may inspect at any time.
These are in addition to all of the rules that you would expect, such as providing air conditioning and heating, as well as a first aid kit and information for the tenants.
Failure to comply with the rules carries heavy penalties. The Junta de Andalucía (the Andalusian autonomous government) has created sanctions of up to 150,000 Euros for gross infringement of the new law.
Only time will tell how and to what extent the new rules in Andalusia are implemented and policed; whether the new system will be manageable; whether the local authorities will deploy the staff necessary to handle the increased workload. However, what is certain is that the trend is towards heavier regulation, stricter control, and fewer opportunities for property owners to operate under the radar, so to speak.
What to do if you plan to rent out your property in Spain
If you plan to rent out your property in Spain for short term holiday lets, in addition to following the new regulatory requirements, it is sensible to ensure that you have an effective rental contract in place in order to govern the relationship between you and your tenant. A well drafted contract can prevent problems and disputes occurring in the future. If you would like to arrange for a rental contract to be prepared, we here at can assist with this.
The message to take from this article is that before you purchase a property in Spain, be certain that you receive independent expert advice in relation to the rules to which you will be subject if you decide to rent out your property on a short term basis.
For more information please take a look at our pages on renting out property in Spain.
If you have any queries or are affected by any of the issues set out in this article, please do be in contact with us. You can contact us by email at info@solicitorsinspain.com, by telephone on 020 3478 1420, or by completing our contact form.
