Demand For Spanish Property Continues To Rise
Spain’s holiday home market is officially booming again, according to Spanish national newspaper El Pais, with clear signs of recovery in Ibiza, Mallorca, Canaries, Costa del Sol, North Alicante and the Maresme.
House prices in the Balearics have risen by a staggering 9.31% with further indications of growth for the remainder of 2018. The recovery is driven by foreign demand, according to the paper, as international interest was re-kindled long before Spanish buyers gained sufficient confidence in the market following the financial crisis of 2007/2008. The British are still Spain’s number one customer, despite Brexit, but many other countries, including Belgium and the Nordic countries are closing the gap.
Locals are now reported to be buying again, with 34% of second-home owners planning to reap the benefits by providing holiday rentals. This compares to just 7% considering residential rents and could prove problematic for locals wanting to rent a home, especially those who have concerns about job security and salaries. According to local agents, foreign investors prefer villas and semi-detached homes, whilst 75% of the Spanish buy apartments. The same data shows that most investors pay between 100,000€ and 200,000€ for a property, but this can be much more for Germans, Russians, and buyers from Nordic countries who are the biggest spenders when it comes to Spanish real estate.
How New Legislation Affects Your Rental Property
As record numbers are set to visit the Balearics this summer, private properties will continue to provide an essential supplement to official holiday accommodation, especially during peak season. Under the 2012 Touristic Act, touristic licenses were permitted only for detached houses, semis and townhouses whilst apartments and terraced houses were not deemed to be suitable for holiday rentals.
It was, however, possible to let out an apartment under a tenancy agreement law which set out a completely different set of non touristic requirements. The new law, introduced on August 1st last year, effectively suspended the concession of new tourism licenses from its outset, thereby restricting holiday rentals to those properties that had been officially granted them or validly submitted applications before the 1st August 2017. The freeze on new licenses will remain in place until the authorities have divided each Balearic island into zones which will determine whether touristic rentals can take place within a given area, and the type of property deemed suitable for rental within that zone.
Exclusion zones and rural protected areas are both regions where holiday rental is not permitted under any circumstances.
The new law will recognise the necessity for rental of various types of properties. Specified types will have the potential to obtain touristic licenses, as long as they are deemed to be situated in an area capable of sustaining touristic rentals for that particular type of property. These changes to the law are important for would-be property investors who are considering holiday rental to offset some of the purchase cost, as they give more scope as to the type of property that is suitable for rental, but require more research into location in order to ensure that it is in an area approved for tourism.
A reputable agent can advise on properties with rental potential, thereby facilitating a stress-free step into the thriving holiday market.
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