Owning a holiday apartment in Spain

PawelK

Hello.
I am looking for someone who had invested in a holiday property in Spain in one of the popular destinations there (i.e. Torrevieja).
I would like to discuss and understand fixed costs (of property remains unoccupied) of owning a 1 bed apartment near the beach and also what deductions can I make if I have any rental income from the property (assuming it will meet criteria of being treated as a holiday let in a given tax year). I tried searching online but found it very difficult to find an actual real life scenario with figures.

Many thanks in advance.

jmmo20

I can't give you specific advice but as a dual national, I know the laws for some regions. Unfortunately Valencia is not one of them.
First warning, even if you find advice, please make sure it applies to Valencia. Spain is divided in devolved administrations and they all have different land and taxation systems. Even within the same region, local taxes varies from municipality to municipality.
Second, from Jan 1st, British citizens will be considered non-nationals because of the end of the Brexit transitions. Any advice you find online now will likely consider UK citizens as nationals and thus things will be different next year. You will be treated like a Russian investor rather than a German homeowner. Non-nationals are taxed differently and in some cases the rates are very much significantly higher. 
Third, many local administrations are banning short-term holiday rentals (airbnb type), so makes sure you understand what the situation is in Torrevieja and whether it's likely to change in the future. Where I'm from all you have  to do is register with the local administration and you have a limit of 45-60 days a year.

I would reach out to a consultoria in Torrevieja so that you cover all bases. As I said, there is no precedent to what is about to happen.

R3dders

Hi, I have owned a holiday home in an area just outside Torrevieja for over 15 years.  I have never rented out my property and have used it 5-6 times a year since.  In recent times I have spent longer periods of time at the apartment.  I love the area with it’s many bars and restaurants and areas well worthy of visits.

In my view, buying a home in Torrevieja would not be an investment especially at the current time, ie Covid-19 and Brexit.  From 1st January 2021 it looks like time in Spain will be strictly limited to 90 days in any 180 days (Although not confirmed yet).  I am currently in the area and there are hundreds if not thousands of holiday let properties sat idle with no short or long term tenants for many months.

I do not have a mortgage on my property or pay any rent and I would estimate my annual cost of around €1200.  This includes SUMA costs, Insurance, electric, water, community fees and taxes.  You will also have to factor in additional insurance and licences to allow you to rent the property.   You also have to consider that the electric and water bills will amount to about €70 per month even without usage.

Other points to consider are that many people, some of which have been in Spain for many years will have to return to the UK as they may not meet the strict criteria that Spain insist on to become a resident so your rental market could be reduced.  There have also been a lot of properties left destroyed by renters or who have not paid any rent.  It can take many months or years to remove a troublesome tenant.  

In my view, I love the area and have enjoyed many good times there, but buy by all means, enjoy your time there, don't rent it out, avoid any rental issues and with a bit of luck the property may increase in value over time.  If you are keen to proceed with your intentions, I would look at a 2 bedroom property on the outskirts of Torrevieja rather that the main large town itself.

PawelK

jmmo20 said:

I can't give you specific advice but as a dual national, I know the laws for some regions. Unfortunately Valencia is not one of them.
First warning, even if you find advice, please make sure it applies to Valencia. Spain is divided in devolved administrations and they all have different land and taxation systems. Even within the same region, local taxes varies from municipality to municipality.
Second, from Jan 1st, British citizens will be considered non-nationals because of the end of the Brexit transitions. Any advice you find online now will likely consider UK citizens as nationals and thus things will be different next year. You will be treated like a Russian investor rather than a German homeowner. Non-nationals are taxed differently and in some cases the rates are very much significantly higher. 
Third, many local administrations are banning short-term holiday rentals (airbnb type), so makes sure you understand what the situation is in Torrevieja and whether it's likely to change in the future. Where I'm from all you have  to do is register with the local administration and you have a limit of 45-60 days a year.

I would reach out to a consultoria in Torrevieja so that you cover all bases. As I said, there is no precedent to what is about to happen.

Thanks. That's why I was hoping to speak with someone who actually invested in Torrevieja so the same rules would apply. Of course UK will be out of EU (actually already is) but I am Polish citizen so would need to consider this. I've heard about some towns limiting holiday rentals etc as it kills their estate and first buyers market.
 I was more after fixed costs such as tax and utility bills that you have to pay even if the property is empty and unoccupied (apart from my visit, say once, twice a year) to see what I would need to break even.

PawelK

R3dders said:

Hi, I have owned a holiday home in an area just outside Torrevieja for over 15 years.  I have never rented out my property and have used it 5-6 times a year since.  In recent times I have spent longer periods of time at the apartment.  I love the area with it’s many bars and restaurants and areas well worthy of visits.

In my view, buying a home in Torrevieja would not be an investment especially at the current time, ie Covid-19 and Brexit.  From 1st January 2021 it looks like time in Spain will be strictly limited to 90 days in any 180 days (Although not confirmed yet).  I am currently in the area and there are hundreds if not thousands of holiday let properties sat idle with no short or long term tenants for many months.

I do not have a mortgage on my property or pay any rent and I would estimate my annual cost of around €1200.  This includes SUMA costs, Insurance, electric, water, community fees and taxes.  You will also have to factor in additional insurance and licences to allow you to rent the property.   You also have to consider that the electric and water bills will amount to about €70 per month even without usage.

Other points to consider are that many people, some of which have been in Spain for many years will have to return to the UK as they may not meet the strict criteria that Spain insist on to become a resident so your rental market could be reduced.  There have also been a lot of properties left destroyed by renters or who have not paid any rent.  It can take many months or years to remove a troublesome tenant.  

In my view, I love the area and have enjoyed many good times there, but buy by all means, enjoy your time there, don't rent it out, avoid any rental issues and with a bit of luck the property may increase in value over time.  If you are keen to proceed with your intentions, I would look at a 2 bedroom property on the outskirts of Torrevieja rather that the main large town itself.

Thanks. That's a fantastic response I was hoping for. Firstly, I understand 70 water bills would already be included in the annual cost of 1,200 you mentioned a sentence earlier. I would be a cash buyer and I am an EU citizen so perhaps will get away with some restrictions or disadvantages that British people will face. And I am definitely not intending on buying now. I won't be ready until probably summer next year. Current situation may actually be favourable for cash buyers as there may be some good bargains to be made next year. I was thinking about having a regular extra income and not just keep the property for myself to use. True, there may be many people going back to the UK but again, that could potentially provide even more apartments onto the market with prices falling. And I think in a longer term British tourists would come back but if not I am pretty sure other nations would. Many thanks again for good points raised.

R3dders

I wouldn’t look at it as an investment.  My apartment is probably worth the same as when I bought it 15 years ago, but I have had a lot of use out of it and fully maintained and modernised it.  If you have retained your Polish Residency it may be better for you, but if you now have British Residency, you may fall in with the 90 days in 180 days rule (if it comes in).  

Cost wise on a 2 bed apartment for me is:

Electric (Monthly) €25.00 Approx if unoccupied.  €66.00 this month but had family staying and hot tub on)

Water (Tri-Monthly) €32.00 approx if unoccupied.  €83.00 this month but filled hot tub and had family staying.

Community Fees Annually €225.00 

SUMA Annually €180.00

Taxes Annually €90.00  (But need to check)

House Insurance Annually €150.00

Solicitor Retention Annually (Optional) €149.00

TV Package/Internet  (Required if renting) Monthly €30.00

Add around €150-€200 annual fee for bank charges.

If you may be using it twice a year you will only be looking for short time renters so you will need a management company or set up of some kind to keep an eye over your property and your renters as well as providing change over services, such as cleaning and key Holding.  Unfortunately I cannot help with any costs here or anything to do with rental licences.  

As far as I am aware the Torrevieja region do not limit overseas buyers in fact the opposite as people own 2-3 and a  good proportion of owners are holiday owners.

PawelK

Can you tell me more about the solicitor retention fee? You may be right about the rules of they come into force. It may not be about your citizenship but residency status. Your figures give me a good idea about annual cost of maintaining the property and they could probably be slightly cheaper for 1 bed apartment. Can I ask, why did you not buy anything close to the beach? Was it because you knew you won't be letting it but just for your sole use? Even if so, I'd still imagine would be nice to have a sea at your doorstep despite many cons this involves.

R3dders

I pay that to deal with my SUMA on my property and car etc.  worth it for me but not necessary to have it.  Generally properties nearer the sea will be more expensive, but we selected a home about 20 minutes walk from sea.  Not sure if having a sea view has any bearing on rentability..

jmmo20

PawelK said:

jmmo20 said:

I can't give you specific advice but as a dual national, I know the laws for some regions. Unfortunately Valencia is not one of them.
First warning, even if you find advice, please make sure it applies to Valencia. Spain is divided in devolved administrations and they all have different land and taxation systems. Even within the same region, local taxes varies from municipality to municipality.
Second, from Jan 1st, British citizens will be considered non-nationals because of the end of the Brexit transitions. Any advice you find online now will likely consider UK citizens as nationals and thus things will be different next year. You will be treated like a Russian investor rather than a German homeowner. Non-nationals are taxed differently and in some cases the rates are very much significantly higher. 
Third, many local administrations are banning short-term holiday rentals (airbnb type), so makes sure you understand what the situation is in Torrevieja and whether it's likely to change in the future. Where I'm from all you have  to do is register with the local administration and you have a limit of 45-60 days a year.

I would reach out to a consultoria in Torrevieja so that you cover all bases. As I said, there is no precedent to what is about to happen.

Thanks. That's why I was hoping to speak with someone who actually invested in Torrevieja so the same rules would apply. Of course UK will be out of EU (actually already is) but I am Polish citizen so would need to consider this. I've heard about some towns limiting holiday rentals etc as it kills their estate and first buyers market.
 I was more after fixed costs such as tax and utility bills that you have to pay even if the property is empty and unoccupied (apart from my visit, say once, twice a year) to see what I would need to break even.

Since you are polish you are considered a national to the purposes of ownership and freedom of movement so that's good I hope others can help you with your other questions.

PawelK

jmmo20 said:

PawelK said:

jmmo20 said:

I can't give you specific advice but as a dual national, I know the laws for some regions. Unfortunately Valencia is not one of them.
First warning, even if you find advice, please make sure it applies to Valencia. Spain is divided in devolved administrations and they all have different land and taxation systems. Even within the same region, local taxes varies from municipality to municipality.
Second, from Jan 1st, British citizens will be considered non-nationals because of the end of the Brexit transitions. Any advice you find online now will likely consider UK citizens as nationals and thus things will be different next year. You will be treated like a Russian investor rather than a German homeowner. Non-nationals are taxed differently and in some cases the rates are very much significantly higher. 
Third, many local administrations are banning short-term holiday rentals (airbnb type), so makes sure you understand what the situation is in Torrevieja and whether it's likely to change in the future. Where I'm from all you have  to do is register with the local administration and you have a limit of 45-60 days a year.

I would reach out to a consultoria in Torrevieja so that you cover all bases. As I said, there is no precedent to what is about to happen.

Thanks. That's why I was hoping to speak with someone who actually invested in Torrevieja so the same rules would apply. Of course UK will be out of EU (actually already is) but I am Polish citizen so would need to consider this. I've heard about some towns limiting holiday rentals etc as it kills their estate and first buyers market.
 I was more after fixed costs such as tax and utility bills that you have to pay even if the property is empty and unoccupied (apart from my visit, say once, twice a year) to see what I would need to break even.

Since you are polish you are considered a national to the purposes of ownership and freedom of movement so that's good I hope others can help you with your other questions.

Thanks but I do think that my UK residency would apply, perhapas and hopefully with some small exceptions in my favour being a EU national. 
It still would be good to hear back on here from anyone who either is or used to work with management company as I'd like to know the real cost of profit sharing of they fully manage your apartment, i.e. cleaning, maintenance, checking in and out, content reports etc.

eamon

From  my understanding your rights as a Polish national living in the UK (resident under the new rules for EU nationals) haven't changed your EU national status at all. You will still have to abide by any Spanish (& local) rules for non-Spanish nationals living/working/owning property in Spain.

As you aren't planning anything until next Summer then time is on your side. When travel is allowed perhaps that would be the time to do a field trip.