The Essential Guide to Renting out your Holiday Home in Spain
Research shows that most property hunters looking in Spain plan to rent out their property at some point, meaning that there’s a lot of competition amongst landlords for guests. Here we provide some useful tips on how to rent out a holiday home by following best practices and standing out from the crowd.
How do you select the right property?
It’s your holiday home, first and foremost – not a pure investment property – so naturally, it will need to be a home and location where you will want to spend holidays, or perhaps eventually to live permanently. But within your chosen area, there are factors to bear in mind if you are buying a holiday home to rent out.
First, think about the number or potential rental weeks you can squeeze out of a property. Since Covid, rental seasons have got longer as more people are remote working abroad but not all holiday coasts are year-round. Of course some locations offer year-round sun like the Canaries.
Once you have decided whether you are a city or resort type, you will also need to establish whether you favour a new-build (probably on a managed development or resort) or a standalone, resale property. Both come with their pros and cons.
New-build homes offer hassle-free, user-friendly rental properties and contemporary style homes with modern layouts and plenty of bathrooms generally photograph well and so attract guests.
Resorts offer leisure facilities, bars, restaurants and shops, to the extent that you barely need to leave the gates. Some are booked out throughout summer among families prepared to pay high prices for the ease of having everything on tap in an English-speaking environment.
Wonderful as they are, such resorts can lack the feeling that you are actually in Spain, though. Also bear in mind the high annual resort fees (also known as service charges or community fees) that you pay as an owner – and that you will be competing with dozens of similar properties on the holiday rental market.
A non-resort property – an old village house, for example, or a more rural finca – comes with charm and character, but it can be a nightmare to deal with broken boilers or a leak when you are 1,000 miles away.
Do not underestimate the convenience of having a rental management team on tap if you are renting out a holiday home. It can be hard to find someone reliable to deal with the regular cleaning, repairs and key handover required with a holiday rental.
In areas where there are large expat populations, many other Britons have set up businesses managing properties – but even if you are not in such an area, there are often friendly locals keen for some reciprocal neighbourly support.
In areas where many people have bought properties as AirBnB investments, there are usually people around to be professional key-holders. But in the age when guest ratings are scrutinised for potentially damaging reviews you definitely need someone close by to handle any emergencies.
Rental management companies come with high costs, though, which you will need to factor into the all-around profitability of your holiday home.
Who are you targeting?
Knowing your audience is key to renting out a holiday home. It will determine everything from where you advertise to how you furnish the place – and prevent you from wasting time and money targeting the wrong people.
Talk to local agents, survey the area (what type of foreigners are sitting in the local cafés? Are they digital nomads?) and work out whether it’s Instagram or Facebook that is going to snare some bookings. The big portals – like booking.com and Airbnb – make the process easy, but it’s not cheap.
Owners either pay a percentage of each booking (beneficial if you have a smaller, cheaper property, or get relatively few inquiries) or an annual fee. You can deal with all payments online, which provides peace of mind to both sides, and you can boost your bookings with good reviews. Once a potential guest has contacted you, make sure that you reply promptly.
The quicker you can respond, the more likely it is you will secure a booking.
Be communicative and helpful to your potential guest – handling a crisis well can avert a bad review. Responding online to a bad review can also mitigate its damage. Repeat business and word of mouth are perhaps the most sought-after sources of bookings, however. They cost nothing in marketing and bring in people you can trust.
Websites can work well, but it pays to have a professional rental agency to manage the property. They will advise on insurance, vet tenants, arrange changeovers and let you know of any specific local rules.
Local rules: beware when buying that a property comes with a rentals licence, or the building permits short-term rentals. In Spain, beware of regional rulings on the granting of new licences – see below.
How to furnish your property is a balancing act between providing an attractive home from home, with all the required gadgets, and not spending a fortune. Do your best to make sure that your home has enough facilities for a number of guests that can stay. If it sleeps six, make sure there are six plates, six chairs, etc. Are there enough sun loungers by the pool?
It needs to be a comfortable stay for all. Renters now expect cafetières at the very least, if not a Nespresso machine.
Without a dishwasher, satellite TV and wi-fi these days, you will lose out on bookings. Equally, families with infants expect high chairs, travel cots and stair gates (if relevant). Bear in mind that all short-let properties see lots of wear and tear. Don’t keep anything there that you don’t want to lose.
Remove the personal element; renters don’t want to see photos of you. And although wall-to-wall Ikea makes everywhere look the same, there are certain benefits in knowing that you can easily pop back to the store to replace a broken chair or pick up a new set of wine glasses. High-paying renters will expect some extras too – maybe some expensive toiletries, extra cleaning, or a bottle of wine or basket of basics for when they arrive.
Keep it legal
One crucial element to be aware of in Spain is the rental laws that apply in each region. Most now require properties to be licensed; and some have stopped issuing them – currently this is the Balearics.
To qualify for a licence, the property has to fulfil certain requirements, such as having central heating and air-conditioning, which is a costly and, in some cases, impossible addition.
Short-term rentals have also been a controversial issue in Barcelona, too, where only properties that are already licensed can be rented out. So if you are buying with holiday rentals in mind, make sure you buy a licensed property.
And finally, there are the admin elements of having a Spanish rental property that must not be overlooked – ensuring you have adequate buildings and contents insurance, paying the correct tax (you must declare your rental income, and pay the appropriate income tax, to the Spanish tax authorities).
Post Brexit the rules have changed for Britons on income tax and what expenses are deductible, so do take expert advice and use an accountant if needed – note that the tax year is different to the UK’s.
To make a success of renting out a holiday home takes effort, but the returns can really be worth it. And with 66 million holidaymakers at your disposal, you will surely find some who will love your home.
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